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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 AND MESA COUNTIES, COLORADO |
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CAUSE NO. 139
ORDER NO. 139-51 |
This cause came on for hearing before the Commission at 10:00 a.m. on October 31, 2005 in the Ramada Inn & Suites, 124 West 6th Street, Glenwood Springs, Colorado, for an order to establish 40-acre drilling and spacing units for the certain lands for the production of gas and associated hydrocarbons from the Iles Formation, to allow the equivalent of one Iles Formation well per 10 acres, with the permitted well to be located downhole anywhere within the unit, no closer than 100 feet from the unit boundary, without exception being granted by the Director of the Oil and Gas Conservation Commission.
FINDINGS
The Commission finds as follows:
1. Noble Energy Inc. (“Noble”), 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 February 28, 2005, the Commission issued Order No. 139-45 which established 40-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, and allowed the equivalent of one well per 10 acres for the below-described lands, with the permitted well to be located downhole anywhere in the drilling and spacing unit but no closer than 100 feet from the boundaries of the unit without exception being granted by the Director of the Oil and Gas Conservation Commission. In cases where the lands abut or corner lands that the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission. No more than four (4) Williams Fork Formation wells downhole per government quarter quarter section shall be allowed, and wells shall be drilled either vertically or directionally from no more than one (1) well pad located on a given quarter quarter section.
Township 8 South, Range 95 West, 6th P.M.
Section 6: All
Section 7: All
Section 18: Resurvey Tract #41
(originally described as the W½ SE¼ of Section 7, and the NW¼ NE¼, NE¼ NW¼ of Section 18 containing 160.00 acres)
Resurvey
Tract #40
(originally described as Lots 3 and 4 and SE¼ SW¼ of Section 7)
Resurvey Tract 38 as located in Sections 7 and 18
Resurvey Tract 39 as located in Section 18
Township 8 South, Range 96 West, 6th P.M.
Section 1: W½, W½ NE¼, W½ SE¼, SE¼ SE¼
Section 2: E½, E½ SW¼
Section 11: E½, SE¼ NW¼, NE¼ SW¼
Section 12: All
Section 13: E½ NW¼, NW¼ NE¼, SW¼ NW¼
5. Rule 318.a. requires that wells drilled in excess of two thousand five hundred (2,500) feet in depth be located not less than six hundred (600) feet from any lease line, and located not less than one thousand two hundred (1,200) feet from any other producible or drilling oil or gas well when drilling to the same common source of supply, unless authorized by order of the Commission upon hearing. The below-listed lands are subject to Rule 318.a.:
Township 7 South, Range 93 West, 6th P.M.
Section 30: Lots 7, 8, 9, 10, 11, NE¼ SW¼
Section 31: Lots 5, 6, 7
Section 32: Lots 3, 5
Township 7 South, Range 94 West, 6th P.M.
Section 24: S½ SW¼ NW¼, N½ SW¼, N½ S½ SW¼
Section 25: S½ N½ NE¼, S½ NE¼
6. On September 12, 2005, Noble, by its attorney, filed with the Commission a verified application for an order to establish 40-acre drilling and spacing units for the below-listed lands (which are subject to Order No. 139-45 for the Williams Fork Formation) for the production of gas and associated hydrocarbons from the Iles Formation, to allow the equivalent of one Iles Formation well per 10 acres, with the permitted well to be located downhole anywhere within the unit, no closer than 100 feet from the unit boundary, without exception being granted by the Director of the Oil and Gas Conservation Commission. In cases where the lands abut or corner lands that the Commission has not at the time of drilling permit application granted the right to drill 10‑acre density Iles Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission. The applicant does not intend to drill more than four (4) Iles Formation wells downhole per government quarter quarter section. Noble commits that both the Iles Formation and Williams Fork Formation wells to be drilled on the lands will on average, if topographically feasible throughout the lands, be drilled from the surface either vertically or directionally from the same pad and no more than one pad located on a given quarter quarter section unless exception is granted by the Director of the Oil and Gas Conservation Commission.
Township 8 South, Range 95 West, 6th P.M.
Section 6: All
Section 7: All
Section 18: Resurvey Tract #41
(originally described as the W½ SE¼ of Section 7, and the NW¼ NE¼, NE¼ NW¼ of Section 18 containing 160.00 acres)
Resurvey Tract #40
(originally described as Lots 3 and 4 and SE¼ SW¼ of Section 7)
Resurvey Tract 38 as located in Sections 7 and 18
Resurvey Tract 39 as located in Section 18
Township 8 South, Range 96 West, 6th P.M.
Section 1: W½, W½ NE¼, W½ SE¼, SE¼ SE¼
Section 2: E½, E½ SW¼
Section 11: E½, SE¼ NW¼, NE¼ SW¼
Section 12: All
Section 13: E½ NW¼, NW¼ NE¼, SW¼ NW¼
7. In addition, Noble requested the order establish 40-acre drilling and spacing units for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations for the below-listed lands with the permitted well to be located downhole anywhere in the drilling and spacing unit but no closer than 100 feet from the boundaries of the unit without exception being granted by the Director of the Oil and Gas Conservation Commission. In cases where the lands abut or corner lands that the Commission has not at the time of drilling permit application granted the right to drill 10‑acre density Williams Fork Formation and Iles Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission. The applicant does not intend by this application to drill more than four (4) Williams Fork Formation and Iles Formation wells downhole per government quarter quarter section. Noble commits that both the Williams Fork Formation and Iles Formation wells to be drilled on the lands will on average, if topographically feasible throughout the lands, be drilled from the surface either vertically or directionally from the same pad and no more than one pad located on a given quarter quarter section unless exception is granted by the Director of the Oil and Gas Conservation Commission.
Township 7 South, Range 93 West, 6th P.M.
Section 30: Lots 7, 8, 9, 10, 11, NE¼ SW¼
Section 31: Lots 5, 6, 7
Section 32: Lots 3, 5
Township 7 South, Range 94 West, 6th P.M.
Section 24: S½ SW¼ NW¼, N½ SW¼, N½ S½ SW¼
Section 25: S½ N½ NE¼, S½ NE¼
8. Prior to the administrative hearing, Noble amended its application to remove the request described above in Finding No. 7.
9. Testimony and exhibits presented at the administrative hearing showed that Noble has 100% of the lands under lease, that Noble plans to drill two (2) wells per month through the end of the year in the application lands, and that Noble has surface use agreements or provisions within leases in the application lands. The surface use of the application lands is mixed agricultural and residential.
10. Testimony and exhibits presented at the administrative hearing showed that the Iles Formation as consists of three (3) members: the Rollins, Cozzette and Corcoran Formations, which represent environments ranging from shallow marine through lower coastal plain, that are highly compartmentalized.
11. Testimony and exhibits presented at the administrative hearing showed a regional view of the depositional environments throughout the application lands, and that the application lands are in a complicated depositional environment which results in a complex Iles Formation reservoir. Additional testimony indicated that the average net sand for the Rollins, Cozzette and Corcoran Formations ranges from 24 feet to 40 feet.
12. Testimony and exhibits presented at the administrative hearing showed that the Iles Formation is highly variable in both the vertical and lateral distribution of sands, with thickening and thinning throughout the application lands, including missing or pinched out sands. Further testimony showed that there is variability in the reservoir quality throughout the application lands.
13. Testimony and exhibits presented at the administrative hearing showed that the Rollins, Cozzette and Corcoran Formations are both diagenetically and biogenetically altered, increasing the compartmentalization and reducing the permeability, necessitating 10 acre density for the Iles Formation.
14. Testimony and exhibits presented at the administrative hearing showed an average combined estimated ultimate recovery of 450 MMCF from the Williams Fork and Iles Formations, and an average drainage area of 7.4 acres.
15. Testimony and exhibits presented at the administrative hearing showed the cost of drilling and completing a well in both the Williams Fork and Iles Formations. Testimony showed that the overall rate of return is sixteen (16) percent, with a cost increase of approximately two hundred thousand dollars ($200,000) for both completions.
16. Testimony and exhibits presented at the administrative hearing showed that 10 acre well density is needed to allow more efficient drainage, to prevent waste, to protect correlative rights, and to ensure greater ultimate recovery of gas and associated hydrocarbons.
17. Noble does not intend to drill more than four (4) wells downhole per government quarter quarter section, to be completed in the same wellbore as a Williams Fork Formation well, and commits to drill wells either vertically or directionally from no more than one (1) well pad located on a given quarter quarter section unless exception is granted by the Director of the Oil and Gas Conservation Commission.
18. Noble agreed to be bound by oral order of the Commission.
19. 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 enter an order to establish 40-acre drilling and spacing units for production of gas and associated hydrocarbons from the Iles Formation, to allow the equivalent of one Iles Formation well per 10 acres, with the permitted well to be located downhole anywhere within the unit, no closer than 100 feet from the unit boundary, without exception being granted by the Director of the Oil and Gas Conservation Commission
NOW, THEREFORE, IT IS ORDERED, that 40-acre drilling and spacing units are hereby established for the below-listed lands (which are subject to Order No. 139-45 for the Williams Fork Formation) for the production of gas and associated hydrocarbons from the Iles Formation, to allow the equivalent of one Iles Formation well per 10 acres, with the permitted well to be located downhole anywhere within the unit, no closer than 100 feet from the unit boundary, without exception being granted by the Director of the Oil and Gas Conservation Commission
Township 8 South, Range 95 West, 6th P.M.
Section 6: All
Section 7: All
Section 18: Resurvey Tract #41
(originally described as the W½ SE¼ of Section 7, and the NW¼ NE¼, NE¼ NW¼ of Section 18 containing 160.00 acres)
Resurvey Tract #40
(originally described as Lots 3 and 4 and SE¼ SW¼ of Section 7)
Resurvey Tract 38 as located in Sections 7 and 18
Resurvey Tract 39 as located in Section 18
Township 8 South, Range 96 West, 6th P.M.
Section 1: W½, W½ NE¼, W½ SE¼, SE¼ SE¼
Section 2: E½, E½ SW¼
Section 11: E½, SE¼ NW¼, NE¼ SW¼
Section 12: All
Section 13: E½ NW¼, NW¼ NE¼, SW¼ NW¼
IT IS FURTHER ORDERED, that in cases where the lands abut or corner lands that the Commission has not at the time of drilling permit application granted the right to drill 10‑acre density Iles Formation wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.
IT IS FURTHER ORDERED, that no more than four (4) Iles Formation wells downhole per government quarter quarter section shall be allowed to be completed in the same wellbore as a Williams Fork Formation well, and that wells shall be drilled either vertically or directionally from no more than one (1) well pad located on a given quarter quarter section unless exception is granted by the Director of the Oil and Gas Conservation Commission.
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 November, 2005, as of October 31, 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
November 30, 2005