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 HIAWATHA

WEST FIELD, MOFFAT COUNTY, COLORADO

)

)

)

)

CAUSE NO.   133

 

ORDER NO.   133-25

 

report of the commission

This cause came on for hearing before the Commission at 9:00 a.m. on May 10, 2007, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to allow up to eight (8) wells in a certain 320-acre drilling and spacing unit, for the production of gas and associated hydrocarbons from the Wasatch, Fort Union-Lance-Lewis and Mesaverde Formations.

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.

4.  On June 23, 1959, the Commission issued Order No. 133-1, which among other things, established 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Wasatch, Fort Union-Lance-Lewis and Mesaverde Formations for certain lands, including the below-listed 320-acre drilling and spacing unit, with the permitted well to be located no closer than 660 feet from the boundaries of the drilling unit, with the wells previously drilled and capable of producing to be the permitted wells for the units on which they are located:

 

Township 12 North, Range 100 West, 6th P.M.
Section 18:      Lots 7-10 (SW¼)
Section 19:      Lots 5, 6, E½ NW¼ (NW¼)

 

5.  On December 2, 2002, the Commission issued Order No. 133-19, which, among other things, allowed a total of five (5) wells to be drilled and completed for the production of gas and associated hydrocarbons from the Wasatch, Fort Union-Lance-Lewis and Mesaverde Formations for certain lands, including the below-listed 320-acre drilling and spacing unit:

 

Township 12 North, Range 100 West, 6th P.M.
Section 18:      Lots 7-10 (SW¼)
Section 19:      Lots 5, 6, E½ NW¼ (NW¼)

 

6.  On February 20, 2007, Chevron U.S.A. Inc., by its attorney, filed with the Commission a verified application for an order to allow up to eight (8) wells in the below-listed 320-acre drilling and spacing unit, for the production of gas and associated hydrocarbons from the Wasatch, Fort Union-Lance-Lewis and Mesaverde Formations:

Township 12 North, Range 100 West, 6th P.M.
Section 18:      Lots 7-10 (SW¼)
Section 19:      Lots 5, 6, E½ NW¼ (NW¼)

 

7.  At the time of the administrative hearing, Chevron elected to amend its application due to the recent results of drilling the Duncan 3-5 Well, for an order to allow up to seven (7) wells in the above-described 320-acre drilling and spacing unit, for the production of gas and associated hydrocarbons from the Wasatch, Fort Union-Lance-Lewis and Mesaverde Formations. 

8.  Testimony and exhibits presented at the administrative hearing showed that the acreage in the application area is leased 100% by Chevron and consists solely of federal minerals and federal surface.

9.  Testimony and exhibits presented at the administrative hearing showed that the Lewis Formation is fairly continuous underlying the application lands, while the Fort Union and Wasatch Formations are discontinuous fluvial sands underlying the application lands.  Further testimony showed that the permeability in the Mesaverde and Lewis Formations is consistently tight and requires stimulation.

10.  Testimony and exhibits presented at the administrative hearing showed that, from well to well within the unit, there was great variability as to which sands were productive, which sands were wet and which sands were not present.  This evidence indicated the discontinuous nature of the sands from well to well.    

11.  Testimony and exhibits presented at the administrative hearing showed pressure tests conducted which indicate that virgin pressure exists in the Fort Union and Wasatch Formations.

12.  Testimony and exhibits presented at the administrative hearing showed that the earliest drilled wells have the highest estimated ultimate recovery and that the estimated drainage area for seven (7) wells in this unit is 302 acres.

13.  Testimony and exhibits presented at the administrative hearing showed that, based upon decline curve analysis, none of the four existing completed wells experienced any decline due to the drilling of offset wells within the unit.  

14.  Testimony and exhibits presented at the administrative hearing showed that a total of (7) seven wells are necessary to efficiently and economically drain the 320-acre drilling and spacing unit in the application area while preventing waste and protecting correlative rights.

15.  Testimony and exhibits presented at the administrative hearing on increased density well economics showed that the project payout will occur in 53 months and is economically feasible.

16.  Chevron USA, Inc. agreed to be bound by oral order of the Commission.

17.  Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to allow up to seven (7) wells to be drilled and completed for the production of gas and associated hydrocarbons from the Wasatch, Fort Union-Lance-Lewis and Mesaverde Formations on the 320-acre drilling and spacing unit described above in Finding No. 6.

ORDER

NOW, THEREFORE, IT IS ORDERED, that up to seven (7) wells are hereby allowed to be drilled and completed for the production of gas and associated hydrocarbons from the Wasatch, Fort Union-Lance-Lewis and Mesaverde Formations on the 320-acre drilling and spacing unit described below:

Township 12 North, Range 100 West, 6th P.M.
Section 18:      Lots 7-10 (SW¼)
Section 19:      Lots 5, 6, E½ NW¼ (NW¼)

 

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 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.

ENTERED this ________day of May, 2007, as of May 10, 2007.

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

May 25, 2007