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 |
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CAUSE NO. 112 ORDER NO. 112-235 |
REPORT OF THE COMMISSION
The Commission heard this matter on April 16, 2012, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, upon application for an order to approve up to five wells to be drilled and completed in Sections 1U and 12U, Township 34 North, Range 7 West, N.M.P.M., with the wells located no closer than 660 feet from the unit boundary, for the production of oil, gas and associated hydrocarbons from the Fruitland Coal Seam Formation.
FINDINGS
The Commission finds as follows:
1. Samson Resources Corporation (“Samson” or “Applicant”), 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 August 15, 1998, the Commission entered Order No. 112-61 which, among other things, established that the fractional sections south of the Southern Ute line in Township 34 for all ranges so affected shall be included with the 320-acre drilling and spacing units in the full section to the south, and the units shall be stand up if possible. Pursuant to Order No. 112-61, the following lands comprise a 397.92 drilling and spacing unit upon the Application Lands:
Section 1U: Lots 1, 2, 3, and 4
Section 12U: N½
5. On July 11, 2000, the Commission entered Order No. 112-157 which, among other things, amended Order Nos. 112-60, 112-61 and 112-85 to allow an optional additional well to be drilled in certain 320-acre drilling and spacing units with the permitted well to be located in any undrilled quarter section no closer than 990 feet to any outer boundary of the unit nor closer than 130 feet to any interior quarter section line. Sections 1U and 12U, Township 34 North, Range 7 West, N.M.P.M. are subject to Order No. 112-157.
6. On October 31, 2005, the Commission entered Order No. 112-181 which, among other things, allowed a total of four wells to be optionally drilled in each 320-acre drilling and spacing unit for certain lands, with the permitted well to be located no closer than 660 feet to any outer boundary of the unit with no interior section line setback, utilizing a common or expanded pad with an existing well, for the production of gas from the Fruitland coal seams. Section 12U, Township 34 North, Range 7 West, N.M.P.M. may be subject to Order No. 112-157.
7. On January 5, 2012, Samson, by its attorneys, filed with the Commission a verified application (“Application”) for an order to approve up to five wells to be drilled and completed in the below-listed lands (“Application Lands”), with the wells located no closer than 660 feet from the unit boundary, for the production of oil, gas and associated hydrocarbons from the Fruitland Coal Seam Formation:
Section 1U: Lots 1, 2, 3, and 4
Section 12U: N½
8. On February 6, 2012, La Plata County (“County”), a local government, filed an Intervention, seeking to preserve its rights to seek a full hearing before the Commission regarding potential environmental and public health, safety and welfare concerns to the people of La Plata County. La Plata County affirmatively stated it had no objections or protests to the technical nature of the Application.
9. On February 15, 2012, Samson requested, and Commission Staff granted, a continuance to the April 16, 2012 Commission hearing.
10. On March 23, 2012, La Plata County, conditionally withdrew its Intervention, and stated it would formally withdraw its Intervention at such time that the Commission entered an order approving the infill application with the conditions agreed upon by Samson and County. The Proposed Conditions of Approval are:
1. Compliance with all terms, conditions and provisions of prior Commission Orders in Cause No. 112.
2. Compliance with the terms and provisions of all of the Commission's health, safety, welfare and environmental rules and regulations now or hereafter in effect.
3. Those certain provisions as set forth in Exhibit A of the Memorandum of Understanding between Applicant and La Plata County as follows:
• Surface Density
The density of Well Pads within the Infill Application Area shall not exceed four (4) within any single 640-acre governmental section of real property. 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 Applicant and after consultation with the Local Governmental Designee, based upon a finding by the Commission that the La Plata County Land Use Code requires a greater density or 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. demonstratively insurmountable technical issues related to the development or management of the mineral resource;
e. other site conditions beyond the control of Applicant; or
f. demonstrable safety concerns.
4. Compliance with all applicable regulations of the BLM, BIA and the Southern Ute Indian Tribe when conducting operations on lands subject to such agency's/ government' s jurisdiction.
11. On April 3, 2012, Samson, by its attorneys, 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.
12. Land testimony and exhibits submitted in support of the Application by John S. Witucki, District Landman for Samson, showed that Samson owns a leasehold interest in the Application Lands, and that all interested parties received proper notice. Testimony noted the Protest and subsequent Conditional Withdrawal of the County protest.
13. Geologic testimony and exhibits submitted in support of the Application by Joseph Nicolette, Geologist for Samson, indicated that the Fruitland Coal Formation underlies and is generally of uniform thickness throughout the Application Lands, with a total thickness of 45 to 55 feet.
14. Engineering testimony and exhibits submitted in support of the Application by Daniel Graeve, Engineer for Samson, indicated that permitting an additional fifth horizontal well in the Application Lands is necessary to increase the recovery factor of hydrocarbons from the reservoir from 64% to 79%.
15. The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.
16. Samson agreed to be bound by oral order of the Commission.
17. Based on the facts stated in the verified Application, having resolved all protests and interventions, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order to approve up to five wells to be drilled and completed in Sections 1U and 12U, Township 34 North, Range 7 West, N.M.P.M., with the wells located no closer than 660 feet from the unit boundary, for the production of oil, gas and associated hydrocarbons from the Fruitland Coal Seam Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that up to five wells to be drilled and completed in the below-listed lands, are hereby approved, with the wells located no closer than 660 feet from the unit boundary, for the production of oil, gas and associated hydrocarbons from the Fruitland Coal Seam Formation:
Section 1U: Lots 1, 2, 3, and 4
Section 12U: N½
IT IS FURTHER ORDERED, that the Proposed Conditions of Approval, identified in Paragraph 10 of the Findings, are hereby incorporated into this Order as follows:
1. Samson must comply with all terms, conditions and provisions of prior Commission Orders in Cause No. 112.
2. Samson must comply with the terms and provisions of all of the Commission's health, safety, welfare and environmental rules and regulations now or hereafter in effect.
3. Samson must comply with provisions as set forth in Exhibit A of the Memorandum of Understanding between Applicant and La Plata County as follows:
• Surface Density
The density of Well Pads within the Infill Application Area shall not exceed four (4) within any single 640-acre governmental section of real property. 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 Applicant and after consultation with the Local Governmental Designee, based upon a finding by the Commission that the La Plata County Land Use Code requires a greater density or 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. demonstratively insurmountable technical issues related to the development or management of the mineral resource;
e. other site conditions beyond the control of Applicant; or
f. demonstrable safety concerns.
4. Samson must comply with all applicable regulations of the BLM, BIA and the Southern Ute Indian Tribe when conducting operations on lands subject to such agency's/ government' s jurisdiction.
IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.
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 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 18th day of April, 2012, as of April 16, 2012.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Peter J. Gowen, Acting Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
April 18, 2012