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 FOR THE FRUITLAND COAL SEAMS FORMATION, IGNACIO-BLANCO FIELD, ARCHULETA COUNTY, COLORADO |
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CAUSE NO. 112
DOCKET NO. 1412-AW-30
ORDER NO. 112-248 |
REPORT OF THE COMMISSION
The Commission heard this matter on March 2, 2015 at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to approve one additional horizontal well, for a total of two horizontal wells, in an approximate 320-acre drilling and spacing unit established for the N½ of Section 21, Township 33 North, Range 5 West, N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland Coal Seams Formation.
FINDINGS
The Commission finds as follows:
1. Petrox Resources, Inc. (Operator No. 69805) (“Petrox” or “Applicant”) 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 entered Order No. 112-60 which approved approved the Fruitland Coal Seams as a separate source of supply and established 320-acre drilling and spacing units with one well at a designated location for each unit for certain lands, including the Application Lands, with authority to drill one well no closer than 990 feet from unit boundary and no closer than 130 feet from any interior quarter section line, for the production of gas and associated hydrocarbons from the Fruitland Coal Seams Formation.
5. On August 15, 1988, the Commission entered Order No. 112-61 which amended parts of Order No. 112-60 and established rules for the production of coalbed methane in the Fruitland Coal Seams, with the productive interval of the wellbore to be no closer than 990 feet to any outer boundary of the unit, and no closer than 130 feet to any interior quarter section line, without exception granted by the Director.
6. On December 17, 1990, the Commission entered Order No. 112-85 which approved two additional field rules applicable to all wells producing from the Dakota, Mesaverde, Fruitland Pictured Cliffs, and Fruitland Coal Formations.
7. On October 16, 2014 (Amended November 18, 2014), Petrox, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S. for an order to approve the drilling of one additional horizontal well, for a total of two horizontal wells, within an approximate 320-acre drilling and spacing unit established by Order No. 112-60 for the N½ of Section 21, Township 33 North, Range 5 West, N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland Coal Seams Formation; and the productive intervals of the wellbore located no closer than 600 feet from the eastern, western and southern unit boundaries (while maintaining 990 foot setbacks from the northern unit boundary) and no closer than 600 feet from the productive interval of a wellbore producing from the Fruitland Coal Seam Formation, without exception being granted by the Director:
Township 33 North, Range 5 West, N.M.P.M.
Section 21: N½
8. On November 20, 2014, Petrox requested, and Commission staff granted, a continuance to the January 26, 2015 hearing.
9. On January 6, 2015, Petrox requested, and Commission staff granted, a continuance to the March 2, 2015 hearing.
10. On February 9, 2015, Petrox, 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.
11. Land testimony and exhibits submitted in support of the Application by Steven A. Muns, Land Manager for EXOK, Inc. Representative for Petrox, showed that Petrox holds oil and gas leasehold interests and has a right to drill in the Application Lands.
12. Geologic testimony and exhibits submitted in support of the Application by Michael Clark, Owner of Petrox, showed an isopach map demonstrating that the Fruitland Coal Formation underlies the Application Lands and the total thickness of the Fruitland Coal Seams Formation underlying the Application Lands range from approximately 30-45 feet thick.
13. Engineering testimony and exhibits submitted in support of the Application by Michael Clark, Owner of Petrox, showed the cumulative production to date, current decline rate per year, remaining recoverable reserves, and estimated ultimate recovery for the Producers Wright 21-1 Well and Lark 21-2 Well, both currently producing from the Fruitland Coal Seams in the Application Lands. The EUR was determined using decline curve analysis. Applicant also provided the calculation of original gas in place for the Application Lands based on the preceding exhibits, including existing EUR, remaining GIP, and the current recovery factor. Based on the information provided, an approximate 320-acre drilling and spacing unit with up to two horizontal wells is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Fruitland Coam Seams.
14. 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.
15. Petrox agreed to be bound by oral order of the Commission.
16. Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to approve two additional wells in an appropriate 320-acre drilling and spacing unit established for the N½ of Section 21, Township 33 North, Range 5 West, N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland Coal Seams.
ORDER
IT IS HEREBY ORDERED:
1. One additional well, for a total of two horizontal wells, within an appropriate 320-acre drilling and spacing unit established for the below-described lands, are hereby approved, for the production of gas and associated hydrocarbons from the Fruitland Coal Seams Formation:
Township 33 North, Range 5 West, N.M.P.M.
Section 21: N½
2. The productive intervals of the wellbore shall be located no closer than 600 feet from the eastern, western and southern unit boundaries (while maintaining 990 foot setbacks from the northern unit boundary) and no closer than 600 feet from the productive interval of a wellbore producing from the Fruitland Coal Seam Formation, without exception being granted by the Director.
IT IS FURTHER ORDERED:
1. The provisions contained in the above order shall become effective immediately.
2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
3. Under the State Administrative Procedure Act, the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.
4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.
ENTERED this 16th day of March, 2015, as of March 2, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Jill Dorancy, Acting Secretary