|
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 RULISON FIELD, GARFIELD COUNTY, COLORADO
|
) ) ) ) |
CAUSE NO. 139
ORDER NO. 139-98 |
This cause came on for hearing before the Commission at 9:00 a.m. on September 22, 2008, in the Sabin-Cleere Conference Room, Building A, Colorado Department of Public Health and Environment, 4300 Cherry Creek Drive South, Denver, Colorado, for an order to allow the equivalent of one well per 10 acres in the S½ NW¼ and N½ SW¼ of Section 8, Township 7 South, Range 93 West, 6th P.M., for production of gas and associated hydrocarbons from the Williams Fork Formation.
FINDINGS
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 pursuant to the Oil and Gas Conservation Act.
4. Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. The S½ NW¼ and N½ SW¼ of Section 8, Township 7 South, Range 93 West, 6th P.M. is subject to this Rule for the Williams Fork and Iles Formations.
5. On May 23, 2008, EnCana, by its attorneys, filed with the Commission a verified application for an order to allow the equivalent of one well per 10 acres in the S½ NW¼ and N½ SW¼ of Section 8, Township 7 South, Range 93 West, 6th P.M., for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
6. On June 6, 2008, EnCana, by its attorneys, filed with the Commission an amended application for an order to allow the equivalent of one well per 10 acres in the S½ NW¼ and N½ SW¼ of Section 8, Township 7 South, Range 93 West, 6th P.M., for production of gas and associated hydrocarbons from the Williams Fork Formation, with the option of producing the Iles Formation on a one well per 20 acre basis for those same lands.
7. On July 31, 2008, EnCana, by its attorneys, filed with the Commissin a second amended application for an order to allow the equivalent of one well per 10 acres, in the S½ NW¼ and N½ SW¼ of Section 8, Township 7 South, Range 93 West, 6th P.M., for production of gas and associated hydrocarbons from the Williams Fork Formation.
All future Williams Fork Formation wells to be drilled upon the application lands should be located downhole anywhere within the application lands but no closer than 100 feet from a lease line or the boundaries of the application lands without exception being granted by the Director of the Oil and Gas Conservation Commission. In cases where the application lands abut or corner lands in respect of which 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 application lands so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.
Except as previously authorized by order of the Commission, wells to be drilled under this application will be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception.
8. On September 4, 2008, EnCana, by its attorney, 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.
9. Testimony and exhibits submitted in support of the application showed that EnCana is the leasehold owner for the applications lands, and that, under Order No. 139-76, lands surrounding the application lands have been approved for 10-acre well density for production of gas and associated hydrocarbons from the Williams Fork Formation. Additional testimony indicated that the S½ NW¼ of Section 8, Township 7 South, Range 93 West, 6th P.M. is federal minerals and the N½ SW¼ of said Section 8 is fee owned minerals.
10. Testimony and exhibits submitted in support of the application showed that the Mesaverde Group is composed of the Williams Fork Formation and the Iles Formation, which is further composed of the Rollins Sandstone and Cozzette and Corcoran Members. Additional testimony and exhibits indicated that the original gas-in-place (“OGIP”) for the Williams Fork Formation underlying the application lands is between 80 and 100 BCF per section, and that average porosity is 5.3% and average permeability is 25.9 millidarcies for the Williams Fork Formation underlying the application lands. Further testimony illustrated the fluvial nature of the Williams Fork Formation with highly lenticular and heterogeneous deposition of the sands and that increased well density is necessary to efficiently and economically recover the gas reserves located under the application lands.
11. Testimony and exhibits submitted in support of the application showed that Williams Fork Formation wells producing under 20-acre well density in the Mamm Creek area have an expected ultimate recovery of 0.96 BCF. Additional testimony demonstrated that by increasing well density from 20-acre to 10-acre, the recovery factor for the Williams Fork Formation underlying the application lands will increase from 38% to 48% of OGIP, which will yield additional gas reserves by an approximate 8 BCF per section. Additional testimony showed that 10-acre drilling density will result in positive economic returns. Further testimony showed that approving 10-acre density for the Williams Fork and Iles Formations underlying the application lands will prevent waste, protect correlative rights, and assure the greatest ultimate recovery of gas and associated hydrocarbons from the reservoir.
12. The above-referenced testimony and exhibits show that the proposed increased well density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
13. EnCana Oil & Gas (USA) Inc. agreed to be bound by oral order of the Commission.
14. 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.b., the Commission should enter an order to allow the equivalent of one well per 10 acres in the S½ NW¼ and N½ SW¼ of Section 8, Township 7 South, Range 93 West, 6th P.M., for production of gas and associated hydrocarbons from the Williams Fork Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that the equivalent of one well per 10 acres is hereby approved for the S½ NW¼ and N½ SW¼ of Section 8, Township 7 South, Range 93 West, 6th P.M., for production of gas and associated hydrocarbons from the Williams Fork Formation.
IT IS FURTHER ORDERED, that all future Williams Fork Formation wells to be drilled upon the application lands shall be located downhole anywhere within the application lands but no closer than 100 feet from a lease line or the boundaries of the application lands without exception being granted by the Director of the Oil and Gas Conservation Commission. In cases where the application lands abut or corner lands in respect of which 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 shall be located downhole no closer than 200 feet from the boundary or boundaries of the application lands 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 except as previously authorized by order of the Commission, wells to be drilled under this application shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception.
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 September, 2008, as of September 22, 2008.
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
September 23, 2008