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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 RULISON FIELD, GARFIELD COUNTY, COLORADO |
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CAUSE NO. 139
ORDER NO. 139-48 |
This cause came on for hearing before the Commission at 10:00 a.m. on July 11, 2005 in the New Indoor Arena Meeting Facility, Garfield County Fairgrounds, 1001 Railroad Avenue, Rifle, Colorado for an order to increase the number of wells which can be optionally drilled into and produced from the Williams Fork and Iles Formations for certain lands in Township 7 South, Range 95 West, 6th P.M., the equivalent of one Williams Fork and Iles Formation well per 20 acres, or thirty-two wells for each 640-acre drilling and spacing unit, with each well located no closer than 200 feet from the boundaries of the unit and no closer than 400 feet from any existing Williams Fork and Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission.
The Commission finds as follows:
1 EnCana Oil & Gas (USA), Inc. (“EnCana”), 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 26, 1962, the Commission issued Order No. 139-3, which established 640-acre drilling and spacing units for certain lands for the production of gas from the Mesaverde Formation, with the permitted well to be located no closer than 990 feet to the boundaries of the quarter section upon which it is located. On July 1, 1997, the Commission issued Order Nos. 139-31 and 440-18, which among other things, allowed the drilling of additional wells up to sixteen (16) on the established 640-acre drilling and spacing units, for certain lands for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, with the permitted well to be located no closer than 400 feet from the outer boundaries of the unit and no closer than 800 feet from any well in the same formation.
5. On May 26, 2005, EnCana Oil & Gas (USA), Inc. (“EnCana”), by its attorney, filed with the Commission a verified application for an order to increase the number of wells which can be optionally drilled into and produced from the Williams Fork and Iles Formations for the below-listed lands, the equivalent of one Williams Fork and Iles Formation well per 20 acres, or thirty-two wells for each 640 acre drilling and spacing unit, with each well located no closer than 200 feet from the boundaries of the unit and no closer than 400 feet from any existing Williams Fork and Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission. Applicant commits that wells to be drilled under this Application will be drilled from the surface either vertically or directionally from no more than one well pad located on a given quarter quarter section unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission, and that both the Williams Fork and Iles Formations will be reached from a single wellbore, i.e., separate wells will not be drilled to reach each formation.
Township 7 South, Range 95 West, 6th P.M.
Section 20: All
Section 21: All
Section 28: All
Section 29: All
6. Testimony and exhibits presented at the administrative hearing indicated that the application area is located approximately three (3) miles southeast of Parachute, Colorado.
7. Testimony and exhibits presented at the administrative hearing showed that the Bureau of Land Management (“BLM”) is the major surface owner in the area. Additional testimony and exhibits showed that the BLM is the major mineral owner in the area, along with a number of small fee mineral interest owners in twelve (12) tracts. Further testimony and exhibits showing Williams Fork and Iles Formation mineral ownership in the application lands indicated that EnCana has leased the majority of all minerals for both formations.
8. Testimony and exhibits presented at the administrative hearing showed that the Williams Fork and Iles Formations are a subsection of the lower Mesaverde Group which includes the Cozzette and Corcoran Formations, and that the Williams Fork Formation is between three thousand (3000) and five thousand (5000) feet thick in the application area.
9. Testimony and exhibits presented at the administrative hearing showed the estimated reserves in the application lands for the Williams Fork Formation are approximately 75 BCF per section and for the Iles Formation are approximately 25 BCF per section.
10. Testimony and exhibits presented at the administrative hearing indicated the average porosity of the Iles Formation is 10% and the average permeability is between 0.03 and 0.045 millidarcies.
11. Testimony and exhibits presented at the administrative hearing showed that hydraulically induced fractures will propagate in an east-west orientation creating an elliptical east-west drainage pattern.
12. Testimony and exhibits presented at the administrative hearing indicated that an average of approximately 22.6 acres are drained by one well. Additional testimony and exhibits showed the estimated ultimate recovery for a Williams Fork Formation well on 20-acre density is 1.2 BCF.
13. Testimony and exhibits presented at the administrative hearing showed that an incremental deepening of six hundred fifty (650) feet to the Iles Formation will result in an incremental 0.35 BCF in reserves, that all Iles Formation wells drilled would be deepenings of Williams Fork Formation wells and that Iles Formation wells could not be economically drilled as “stand alone” wells.
14. EnCana Oil and Gas (USA) Inc. agreed to be bound by oral order of the Commission.
15. Based on the facts stated in the verified application, having received no protests and have been heard by the Hearing Officer who recommended approval, the Commission should approve the application.
NOW, THEREFORE, IT IS ORDERED, that Order No. 139-31 is hereby amended to increase the number of wells which can be optionally drilled into and produced from the Williams Fork and Iles Formations for the below-listed lands, the equivalent of one Williams Fork and Iles Formation well per 20 acres, or thirty-two wells for each 640-acre drilling and spacing unit, with each well located no closer than 200 feet from the boundaries of the unit and no closer than 400 feet from any existing Williams Fork and Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission:
Township 7 South, Range 95 West, 6th P.M.
Section 20: All
Section 21: All
Section 28: All
Section 29: All
IT IS FURTHER ORDERED, that wells to be drilled on the above-described lands shall be drilled from the surface either vertically or directionally from no more than one well pad located on a given quarter quarter section unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission, and that both the Williams Fork and Iles Formations shall be reached from a single wellbore, i.e., separate wells shall not be drilled to reach each formation.
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, 2005, as of July 11, 2005.
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 26, 2005