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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. 112-212 |
This cause came on for hearing before the Commission at 8:00 a.m. on July 15, 2008, in Ballroom B of the Brown Palace Hotel, 321 Seventeenth Street, Denver, Colorado, for an order to allow two additional wells, for a total of four, in the 320-acre drilling and spacing units in certain lands in Townships 33 and 34 North, Ranges 9 and 10 West, N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland coal seams, with the permitted well to be located no closer than 660 feet from the outer unit boundary.
FINDINGS
The Commission finds as follows:
1. Chevron U.S.A. Inc., and Four Star Oil & Gas Company (“Applicants”), 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 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 June 17, 1988, the Commission issued Order No. 112-60, which among other things, established 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Fruitland coal seams including the below-listed lands, with the permitted well to be located no closer than 990 feet to any outer boundary of the unit, nor closer than 130 feet to any interior quarter section line. Subsequent Order No. 112-85 amended Order No. 112-60 to include additional field rules for the lands subject to Order No. 112-60.
Township 33 North, Range 10 West, N.M.P.M., (SUL)
Section 5: N½ and S½
Township 34 North, Range 9 West, N.M.P.M., (SUL)
Section 5U: All
Section 6U: All
Section 7U: N½ and S½
Section 8U: N½ and S½
Section 18: N½
Township 34 North, Range 10 West, N.M.P.M., (SUL)
Section 12U: S½
Section 13: N½
5. On July 1, 2000, the Commission issued Order No. 112-157 which granted, at the discretion of the operator, an additional well within certain 320-acre drilling and spacing units, including the above-described units, 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 August 9, 2007, Applicants, by their attorney, filed with the Commission a verified application for an order to allow up to 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, with the bottomhole of each well to be located no closer than 660 feet to any outer boundary of the unit and no closer than 130 feet to any interior section line, providing that the Director has the right to approve exceptions to the permitted well locations for geological, topographic or surface location concerns.
Township 33 North, Range 10 West, N.M.P.M., (SUL)
Section 5: N½ and S½
Township 34 North, Range 9 West, N.M.P.M., (SUL)
Section 5U: All
Section 6U: All
Section 7U: N½ and S½
Section 8U: N½ and S½
Section 18: N½
Township 34 North, Range 10 West, N.M.P.M., (SUL)
Section 12U: S½
Section 13: N½
7. On September 12, 2007, La Plata County filed with the Commission an intervention to the application. On September 12, 2007, Mary Parnell, Molly E. Watson, Richard K. Watson, Theresa Watson, and James C. Garnand filed with the Commission a protest to the application. On September 17, 2007, the San Juan Citizens Alliance filed with the Commission an intervention to the application.
8. On September 19, 2007, Applicants amended their application to continue all the application lands except Section 5, Township 33 North, Range 10 West, N.M.P.M. to the November 2007 hearing. On September 19, 2007, La Plata County withdrew its intervention only with respect to the amended application lands. On September 20, 2007, Mary Parnell, Molly E. Watson, Richard K. Watson, Theresa Watson, and James C. Garnand withdrew their protest with respect to all of the application lands. On September 20, 2007, the San Juan Citizens Alliance withdrew its intervention only with respect to the amended application lands.
9. On October 2, 2007 (corrected November 1, 2007), the Commission issued Order No. 112-208, which allowed up to four wells to be optionally drilled into and produced in each of the 320-acre drilling and spacing units consisting of the N½ and S½ of Section 5, Township 33 North, Range 10 West, N.M.P.M. for the production of gas and associated hydrocarbons for the Fruitland coal seams. Further, it was 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.
10. On October 15, 2007, the Applicants, by their attorney, filed with the Commission a written request to continue the matter to the January hearing for the below-listed lands, and the hearing in this matter was continued.
Township 34 North, Range 9 West, N.M.P.M., (SUL)
Section 5U: All
Section 6U: All
Section 7U: N½ and S½
Section 8U: N½ and S½
Section 18: N½
Township 34 North, Range 10 West, N.M.P.M., (SUL)
Section 12U: S½
Section 13: N½
11. On January 3, 2008, the Applicants, by their attorney, filed with the Commission a written request to continue the matter to the May hearing, and the hearing in this matter was continued.
12. On May 27, 2008, the Applicants, by their attorney, filed with the Commission a written request to continue the matter to the July hearing, and the hearing in this matter was continued.
13. On June 13, La Plata County, by their attorney, filed with the Commission a request to withdraw its intervention, which raised environmental and public health, safety and welfare concerns regarding the application, which were resolved by imposition of conditions agreed upon by La Plata County and the Applicants, and the execution of a Memorandum of Understanding between Chevron and La Plata County.
14. On or about June 27, 2008, the San Juan Citizens Alliance verbally withdrew their intervention, indicating they would instead file a statement under Rule 510. to address another matter of concern before the Commission regarding the location of a well within 1½ miles of the outcrop between the Fruitland and Pictured Cliffs Formations.
15. On June 24, 2008, Applicants, by their attorney, filed with the Commission a written request to approve the application based on the merits of the verified application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the application.
16. Testimony and exhibits submitted in support of the application showed that the lands in the general vicinity of 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. Additional testimony indicated that Applicants intend to minimize surface disturbance by drilling directionally or horizontally from existing well pads.
17. 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 the Fruitland coal seams.
18. Testimony and exhibits submitted in support of the application showed that existing wells producing from the Fruitland coal seams recover approximately 28% of the original gas-in-place (“OGIP”) and that 160-acre infill wells recover an additional 22% of the OGIP, for a total estimated recovery factor of 50%. Additional testimony and exhibits showed that 80-acre well density will recover additional reserves of approximately 1.95 BCF per well from the Fruitland coal seams on the 320-acre drilling and spacing units in the application lands.
19. 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.
20. Chevron U.S.A. Inc., and Four Star Oil & Gas Company agreed to be bound by oral order of the Commission.
21. Based on the facts stated in the verified amended application, having received one protest and one intervention which were withdrawn and one intervention which was resolved through stipulated conditions which will be recited in this order, and based on the Hearing Officer review of the application under Rule 511.b., the Commission should enter an order to allow two additional wells, for a total of four, in the 320-acre drilling and spacing units in certain lands in Townships 33 and 34 North, Ranges 9 and 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 two additional wells, for a total of four, are hereby allowed in the 320-acre drilling and spacing units in the below listed lands, for the production of gas and associated hydrocarbons from the Fruitland coal seams:
Township 34 North, Range 9 West, N.M.P.M., (SUL)
Section 5U: All
Section 6U: All
Section 7U: N½ and S½
Section 8U: N½ and S½
Section 18: N½
Township 34 North, Range 10 West, N.M.P.M., (SUL)
Section 12U: S½
Section 13: 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 wells drilled in the above-described lands shall comply with certain provisions of the MOU between Chevron and La Plata County, and shall comply with all terms, conditions and provisions of prior Commission Orders in Cause No. 112, including without limitation, the specific provisions of Order No. 112-157 including the Rule 508.j.(3)B. conditions attached thereto, to the extent they do not duplicate the provisions of the MOU. For convenience and ease of reference, the relevant conditions of the MOU and Order No. 112-157, including Rule 508.j.(3)B. conditions, are set forth below. Conflicts between the conditions of the MOU set forth herein and the terms, conditions and provisions of Order No. 112-157 shall be resolved in favor of the MOU.
IT IS FURTHER ORDERED, that the following provisions of the MOU between Chevron and La Plata County shall be applied to additional wells where the surface location is proposed to be sited on lands subject to Commission jurisdiction, in addition to any requirements of applicable existing Commission Rules and Regulations or orders:
Surface Density The density of Fruitland Coal Well Pads within the Infill Application Area shall not exceed two (2) within the existing drilling and spacing units of 320 acres for the Fruitland Coal Seam formation covering lands in La Plata County, Colorado. Notwithstanding the foregoing, nothing contained in this provision shall be construed so as to require the closure or abandonment of any existing gas well.
Well Location; Exceptions The Commission may grant a special exception allowing for a greater density of Fruitland Coal well pads (i.e., more than 4 per 640-acre section), at the request of Chevron and after consultation with the Local Governmental Designee, based upon a finding by the Commission that one or more of the following factors apply in a manner such that use of an existing well pad is rendered impractical:
a. topographic characteristics of the site;
b. natural resource constraints (e.g., wetlands);
c. the location of utilities or similar services;
d. geologic factors or where issues concerning distances between wells are present;
e. other site conditions beyond the control of Chevron; or
f. safety concerns.
Storm Water Management and Spill Prevention Containment and Control Even if not required to do so by any applicable regulation or law, Chevron agrees to utilize best management practices for all pad expansions and new pads and for road and pipeline development or improvements.
Water Well Monitoring If a conventional gas well exists within one quarter (1/4) mile of the bottom hole location of a proposed Infill Well, then the two (2) closest water wells within a one-half (1/2) mile radius of the conventional gas well shall be sampled by Chevron as water quality testing wells. If possible, the water wells selected shall be on opposite sides of the existing conventional gas well not exceeding one-half (1/2) mile radius. If water wells on opposite sides of the conventional gas well cannot be identified, then the two (2) closest wells within one-half (1/2) mile radius shall be sampled. If two (2) or more conventional gas wells are located within one quarter (1/4) mile of the bottom hole location of the proposed Infill Well, then the conventional gas well closest to a proposed Infill Well shall be used for selecting wells for sampling.
If no conventional gas wells are located within one quarter (1/4) mile radius of the bottom hole location of the proposed Infill Well, then the selected water wells shall be within one quarter (1/4) mile of the bottom hole location of the proposed Infill Well. In areas where two (2) or more water wells exist within one quarter (1/4) mile of the bottom hole location of the proposed Infill Well, then the two (2) closest water wells shall be sampled by Chevron. Ideally, if possible, the water wells selected should be on opposite sides of the bottom hole location of the proposed Infill Well. If water wells on opposite sides of the bottom hole location of the proposed Infill Well cannot be identified, then the two (2) closest wells within one quarter (1/4) mile radius shall be sampled by Chevron. If two (2) water wells do not exist within one quarter (1/4) mile radius, then the closest single water well within a one-half (1/2) mile radius shall be selected.
If no water well is located within a one quarter (1/4) mile radius area or if access is denied, a water well within one-half (1/2) mile of the bottom hole location of the Infill Well shall be selected. If there are no water quality testing wells meeting the foregoing criteria, then sampling shall not be required. If the BLM or the COGCC have already acquired data on a water well within one quarter (1/4) mile of the conventional gas well, but it is not the closest water well, it shall be given preference in selecting a water quality testing well. The "initial baseline testing" described in this paragraph shall include ail major cations and anions, TDS, iron and manganese, nutrients (nitrates, nitrites, selenium), dissolved methane, pH, presence of bacteria and specific conductance and field hydrogen sulfide.
If free gas or a methane concentration level greater than 2 mg/L is detected in a water quality testing well, compositional analysis and carbon isotopic analyses of methane carbon shall be performed to determine gas type (thermogenic, biogenic or an intermediate mix of both). If the testing results reveal biogenic gas, no further isotopic testing shall be done. If the carbon isotope test results in a thermogenic or intermediate mix signature, annual testing shall be performed thereafter and an action plan shall be drafted by Chevron to determine the source of the gas. If the methane concentration level increases by more than 5 mg/L between sampling periods, or increase to more than 10 mg/L, an action plan shall be drafted to determine the source of the gas.
The initial baseline testing shall occur prior to the drilling of the proposed Infill Well. Within one (1) year after completion of the proposed Infill Well, a "post completion" test shall be performed for the same parameters above and repeated three (3) and six (6) years thereafter. If no significant changes from the baseline have been identified after the third test (the six year test), no further testing shall be required. The testing schedule will restart after the drilling of a new Infill Well on an existing Well Pad if the wells to be tested include those tested for the 160-acre infill program. Additional "post completion" test(s) may be required if changes in water quality are identified during follow-up testing. The Director of the COGCC may require further water well sampling (which may include water quality monitoring) at any time in response to complaints from water well owners.
Within three (3) months of collecting the samples used for the test, copies of all test results described above shall be provided to the COGCC and the County and the landowner where the water quality testing well is located
Plugged and Abandoned Wells/Soil Gas Vapor Survey A soil gas vapor-monitoring program is designed to determine a possible lack of zonal isolation along wellbores of plugged and abandoned wells. Chevron will attempt to identify any plugged and abandoned wells located within 0.25 miles of the bottom hole location of any Infill Well. Any plugged and abandoned well within 0.25 miles of the bottom hole of an Infill Well will be assessed for risk, taking into account cementing practices reported in the plugged and abandoned reports. Chevron shall notify the COGCC of all results of all risk assessments of plugging procedures. The COGCC may appropriate funds under Rule 701 (the Environmental Response Fund) to conduct soil gas monitoring tests to further define the risks. If the monitoring reveals a possible lack of zonal isolation, the COGCC may then conduct or order any necessary remediation or other authorized activities.
It is further agreed by Chevron and La Plata County that all applicable regulations of the BLM, BIA and the Southern Ute Indian Tribe (“SUIT”) shall be complied with when conducting operations on lands subject such agency's jurisdiction as regards activity in this application.
IT IS FURTHER ORDERED, that the following terms, conditions and provisions of Order No. 112-212 shall be applied to additional wells where the surface location is proposed to be sited on lands subject to Commission jurisdiction, in addition to any requirements of applicable existing Commission Rules and Regulations:
Well Permit Limitations A Commission hearing shall be required before a drilling permit may be issued for a well site located within one and one-half (1½) miles of the outcrop contact between the Fruitland and Pictured Cliffs Formations. The purpose of the hearing shall be to address potential adverse impacts to the Fruitland outcrop.
Annual Drilling Plan The Director shall survey the operator as to its drilling plans for 2008, and annually thereafter. The survey results shall be reported to the Commission for its consideration with respect to the conditions attached to this order.
Wildlife The operator shall notify the Colorado Division of Wildlife ("CDOW") of the location of any proposed additional well site and advise the Director of the date such notice was provided. If the Director receives comments from the CDOW within ten (10) days of the date notice was provided, such comments may be considered in applying Rule 508.j.(3)B. conditions.
Emergency Preparedness Plan The operator submitting an Application for Permit-to-Drill for a proposed additional well under this order shall file and maintain a digital Emergency Preparedness Plan ("EPP") with La Plata County. The EPP shall include as-built facilities maps showing the location of wells, pipelines and other facilities, except control valve locations that which may be held confidential. The EPP shall include an emergency personnel contact list.
Gas and Oil Regulatory Team The Director shall ensure that the La Plata County Gas and Oil Regulatory Team ("GORT") continues to meet as appropriate, but no less than semiannually. GORT meetings may be scheduled more frequently if the members believe a meeting is appropriate. (GORT includes invited member representatives from La Plata County, BLM, SUIT, industry operators and Commission. Its meetings are open and typically attended by interested area residents.)
3M Mapping, Modeling and Monitoring Project The Director shall ensure that the 3M Technical Peer Review Team is invited to meet as appropriate, but no less than semiannually to review proposals and results related to the 3M Mapping, Modeling and Monitoring Project. 3M Technical Peer Review Team meetings may be scheduled more frequently if the members believe a meeting is appropriate.
Post Completion Pressure Build-Up Tests In addition to obtaining a bottom hole pressure on all wells drilled under this order, the operator shall conduct pressure build-up tests two (2) to three (3) months after initial production begins and once every three (3) years thereafter. The operator shall provide the data acquired, an evaluation of the data and the procedures utilized to conduct the pressure build-up tests to the Director within thirty (30) days of the conclusion of each test. After reviewing the quality of the pressure buildup data and the adequacy of the geographic distribution of the data, the Director may reduce the number of wells for which pressure build-up testing is required.
IT IS FURTHER ORDERED, that the following Rule 508.j.(3)B. conditions from Order No. 112-157 shall be applied to additional wells where the surface location is proposed to be sited on lands subject to Commission jurisdiction, in addition to any requirements of applicable Commission Rules and Regulations:
Prior to approving any Application for Permit-to-Drill, the Director shall conduct an onsite inspection if the surface well location is proposed to be sited within any subdivision that has been approved by La Plata County. The Director shall conduct an onsite inspection if the surface well location is within two (2) miles of the outcrop contact between the Fruitland and Pictured Cliffs Formations and the surface owner, LGD, operator, or Director requests an onsite inspection.
Prior to approving any Application for Permit-to-Drill, the Director shall conduct an onsite inspection if the operator and the surface owner have not entered into a surface use agreement. If the reason the surface use agreement has not been executed is related to surface owner compensation, property value diminution, or any private property contractual issues between the operator and the surface owner, then no onsite inspection shall be required.
The purpose of the onsite inspection shall be to identify any potential public health, safety and welfare or significant adverse environmental impacts within Commission jurisdiction regarding the proposed surface location that may not be adequately addressed by Commission rules or orders. The onsite inspection shall not address matters of surface owner compensation, property value diminution, or any private party contractual issues between the operator and the surface owner.
When the Director conducts onsite inspections under the conditions described in the paragraphs above, the Director shall invite the representatives of the surface owner, the operator and LGD to attend. The Director shall attempt to select a mutually acceptable time for the representatives to attend. The inspection shall be conducted within ten (10) days, or as soon as practicable thereafter, of either the date the LGD advises the Director in writing that the proposed surface well site location falls within an approved subdivision or the date the operator advises the Director in writing that a surface use agreement has not been reached with the surface owner. If requested by the operator, the Director may delay the onsite inspection to allow for negotiation between the operator and surface owner or other parties.
Following the onsite inspection, the Director shall apply appropriate site specific drilling permit conditions if necessary to prevent or mitigate public health, safety and welfare or significant adverse environmental impacts taking into consideration cost-effectiveness and technical feasibility and relevant geologic and petroleum engineering conditions as well as prevention of waste, protection of correlative rights, and promotion of development.
Examples of the types of impacts and conditions that might be applied if determined necessary by the Director include (this list is not prescriptive or all inclusive):
Visual or aesthetic impacts - moving the proposed surface well site location or access road to take advantage of natural features for screening; installing low profile artificial lift methods; constructing artificial features for screening
Surface impacts – moving or reducing the size, shape, or orientation of the surface well site location or access road to avoid disturbance of natural features or to enhance the success of future reclamation activities; utilizing an existing surface well site location or access road to avoid the impacts of new construction; utilizing a closed drilling fluid system instead of reserve pits to avoid impacts to sensitive areas
Noise impacts – installing electric motors where practicable; locating or orienting motors or compressors to reduce noise; installing sound barriers to achieve compliance with Commission rules; confining cavitation completion operations (excluding flaring) to the hours of 7 a.m. to 7 p.m. and notifying all area residents within one-half (½) mile at least seven (7) days before cavitation is commenced
Dust impacts – watering roads as necessary to control dust during drilling and completion operations
Ground water impacts – collecting and analyzing water and gas samples from existing water wells or springs; installing monitoring wells, collecting samples, and reporting water, gas and pressure data
Safety impacts – soil gas sampling and analysis; residential crawl space gas sampling and analysis; installing security fencing around wellheads and production equipment
Outcrop impacts – performing outcrop gas seep surveys; performing produced water quality analysis; periodic pressure transient testing of high water/gas ratio wells; limiting water production in wells with anomalously high water rates and water/gas ratios; funding investigative reservoir modeling under the Director’s supervision
Wildlife impacts – limiting drilling and completion operations during certain seasonal time periods when specific site conditions warrant
If the operator objects to any of the conditions of approval applied above, the Director shall stay the issuance of the drilling permit and properly notice and set the matter for the next regularly scheduled Commission hearing at which time the Commission may determine conditions of drilling permit approval.
If the Director has reasonable cause to believe that any existing or proposed oil and gas operations are causing, or are likely to cause, public health, safety and welfare or significant adverse environmental impacts within Commission jurisdiction that may not be adequately addressed by Commission rules or orders, the Director may properly notice and set the matter for the next regularly scheduled Commission hearing to order appropriate investigative or remedial action. Reasonable cause may include, but is not limited to, information from the 3M Mapping, Modeling and Monitoring Project.
IT IS FURTHER ORDERED, that, in addition to the above-described conditions, the following shall apply:
The Applicants shall endeavor to install two (2) monitoring wells, one (1) located either in Section 6 or 8, Township 34 North, Range 9 West (North of Southern Ute Indian Line) and one (1) located in Section 4, Township 34 North, Range 9 West (North of Southern Ute Indian Line). These wells shall be installed into the Fruitland Formation and perforated across the coal seams. The proposed locations of these wells will be discussed with and approved by the COGCC project manager for the La Plata County portion of the 4M Project. A suite of logs will be run, including gamma ray, bulk density, resistivity, caliper and spontaneous potential. A sonic log will also be run to determine face and butt cleat orientation. The wells shall be shut-in and static gradient pressure tests shall be performed in the wells on a monthly basis or the wells shall be equipped with two (2) pressure transducers, one to measure bottomhole pressure and one to measure wellhead pressure and an electronic data logger. Pressure data shall be reported to the COGCC on a monthly basis. The wells shall be blown down periodically, but at least once annually, and a meter shall be used to measure the rate and volume of the gas released. At the conclusion of the blow down test, which will be either after the well has blown down or after 24 hours of venting, a pressure measuring device shall be run in the well to measure bottomhole shut-in pressure and fluid level, if present. The results shall be reported to the COGCC within one (1) month of the test.
The Applicants shall conduct a detailed soil gas survey over the outcrop of the Fruitland Formation in Sections 4, 5, 6, 7, and 12, Township 34 North, Range 9 West (North of Southern Ute Indian Line), Section 33, Township 34.5 North, Range 9 West, and Section 26, 27, 33, and 34, Township 35 North, Range 9 West. A grid-mapping system, such as that currently used for the outcrop monitoring required by Order Nos. 112-156 and 112-157 shall be used and shall include collecting gas measurements of methane, hydrogen sulfide, and carbon dioxide flux using a portable flux meter. The locations of the measurements shall be accurately located using Global Positioning System technology. This work is a stand alone requirement of this order, but the results shall also be incorporated into the annual report for the outcrop monitoring required by Order Nos. 112-156 and 112-157.
Chevron will contribute a proportional share to the SUIT proposed “Angel Services Laser Flight” to conduct low altitude, high resolution aerial reconnaissance and image capture using a digital infrared camera (IR) capable of pinpointing areas of dead and stressed vegetation, to be conducted in coordination with the proposed additional pedestrian surveys of the entire Fruitland/Pictured Cliffs outcrop within the outcrop area. The project would map methane, contour and measure methane flux rates across the outcrop. Chevron would fund the flyover portion of the outcrop from the north line of the Southern Ute Indian Reservation to at least Section 26, Township 35 North, Range 9 West (North of the Southern Ute line). A detailed discussion of this technique is captured in the May 2006 LTE Study. The data obtained by Chevron and analysis of the data will be provided to La Plata County and COGCC.
To define the extent of known or suspected gas seeps, Chevron will use Temporary Monitoring Probes along the Basin Creek and Carbon Junction seeps to supplement the IR flyover and the COGCC pedestrian soil surveys and any additional seeps that may appear within the outcrop area. The data obtained, and analysis of the data will be provided to La Plata County and COGCC.
Review the plugging and abandonment procedures for the Federal #34-1/2 34-1 Well (05-067-07514) located in SESE, Section 34, Township 34.5 North, Range 9 West (North of Southern Ute Indian Line) and assess the potential risk of this well to act as a conduit for migration of gas from the Fruitland Formation, taking into account cementing practices reported in the P&A report. Chevron shall notify the Director of the results of the plugging and abandonment assessment. The Director shall review the assessment and take appropriate action to pursue further investigation and remediation if warranted. In addition, Chevron shall conduct a soil gas survey in the vicinity of the Federal #34-1/2 34-1 Well (05-067-07514) on an annual basis. The results shall be reported to the COGCC within one (1) month of the survey. If gas is detected in or around this well, then a gas sample shall be collected and submitted for compositional analysis and stable isotope analysis of the carbon and hydrogen of the methane. The results of the soil gas survey shall be reported to the COGCC within two (2) months of the sample collection.
Blow down the five (5) shut-in wells currently monitored by Chevron: Day-V Ranch #1-35 Well (API 05-067-06894), State of Colorado #36-3 Well (API 05-067-07467), Day-V Ranch #35-2 Well (API 05-067-07494), Federal #34-1 Well (API 05-067-07615), and Day-V Ranch 34-½ #35-1 Well (API 05-067-07468). During the blow down test a meter shall be used to measure the rate and volume of the gas released. At the conclusion of the test, which will be either after the well has blown down or after 24 hours of venting, a pressure measuring device shall be run in the well to measure bottomhole shut-in pressure and fluid level, if present. The results shall be reported to the COGCC within one (1) month of the test.
Develop a response and mitigation plan that shall be implemented should the seepage of methane gas increase along the outcrop of the Fruitland Formation in Sections 4, 5, 6, 7, and
12, Township 34 North, Range 9 West (North of Southern Ute Indian Line), Section 33, Township 34.5 North, Range 9 West, and Section 26, 27, 33, and 34, Township 35 North, Range 9 West in response to what is determined to be production from gas wells downdip from the outcrop. The response and mitigation plan shall be developed by October 1, 2008 and reviewed on an annual basis and updated as deemed necessary based upon data collected during the previous year. Complete copies shall be submitted to the COGCC and the La Plata County Emergency Management Coordinator.
As sufficient data are collected, calibrate the 2008 reservoir simulation model to confirm the prediction that infill drilling shall reduce gas seepage at the outcrop. The first recalibration shall occur in January 2010. The need for subsequent recalibrations shall be assessed at that time.
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 July, 2008, as of July 15, 2008.
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 22, 2008