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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 MESA COUNTY, COLORADO |
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CAUSE NO. 166
ORDER NO. 166-23 |
This cause came on for hearing before the Commission at 10:00 a.m. on June 5, 2006, in the Council Chamber Room of the Ambulance Building, 304 West 3rd Street, Wray, Colorado, for an order to allow the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the unit boundary, for certain lands In Townships 9 through 10 South, Ranges 94 through 95 West, 6th P.M., for production of gas from the Mesaverde Formation.
The Commission finds as follows:
1. Laramie Energy, LLC, (“Laramie”), 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. On April 20, 1981, the Commission issued Order No. 166-15, which amended Order No. 166-11, to among other things, establish 160-acre drilling and spacing units for the production of gas from the Mesaverde Formation (defined to include the Corcoran Sandstone as its basal member), to cover additional lands including those described below, with the permitted well to be located no closer than 600 feet from the boundaries of the drilling unit:
Township 9 South, Range 94 West, 6th P.M.
Sections 31 and 32: All
Section 33: SW¼
Township 9 South, Range 95 West, 6th P.M.
Section 36: All
Township 10 South, Range 94 West, 6th P.M.
Sections 5 through 8: All
Sections 16 through 21: All
Township 10 South, Range 95 West, 6th P.M.
Section 1: All
Sections 12 and 13: All
Section 24: All
5. On May 21, 1984, the Commission entered Order No. 166-19, which among other things, deleted Sections 31 and 32, Township 9 South, Range 94 West, 6th P.M. from the spaced area of the Plateau Field and exempted these lands from Rule 318. only insofar as it pertains to the Cameo Coal Section of the Mesaverde Formation, however these lands remained subject to Order No. 166-15 for the production of gas from all other zones of the Mesaverde Formation.
6. On February 14, 2005, the Commission entered Order No. 166-20, which allowed three (3) additional wells to be optionally drilled within the below-described 160-acre drilling and spacing units for the production of gas from the Mesaverde Formation (defined to include the Corcoran Sandstone as its basal member), for a total of four (4) wells, with the permitted well to be located no closer than 600 feet from the boundaries of the drilling unit upon which it is located for the below-listed lands:
Township 9 South, Range 94 West, 6th P.M.
Sections 31 and 32: S½
Township 9 South, Range 95 West, 6th P.M.
Section 36: E½, SW¼
Township 10 South, Range 94 West, 6th P.M.
Section 5: W½
Section 6: All
Section 7: NE¼, SW¼
Section 8: All
Section 16: SW¼
Section 17: NE¼
Section 18: W½, NE¼
Township 10 South, Range 95 West, 6th P.M.
Section 1: NE¼
7. On December 6, 2005, corrected on February 28, 2006, the Commission entered Order No. 166-22, which allowed three (3) additional wells to be optionally drilled in each 160-acre drilling and spacing unit, for a total of four (4) wells, for the production of gas from the Mesaverde Formation (including the Corcoran Sandstone as its basal member), with the permitted well to be located no closer than 600 feet from the boundaries of the drilling unit or 1200 feet from any producible well for the below-described lands:
Township 9 South, Range 94 West, 6th P.M.
Sections 31 and 32: NW¼
Township 10 South, Range 94 West, 6th P.M.
Section 16: NW¼, SE¼
Section 17: SW¼
Section 19: NW¼
Section 20: SW¼
8. Rule 318.a. of the Rules and Regulations of the Commission 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. The below-listed lands are subject to this rule:
Township 9 South, Range 94 West, 6th P.M.
Sections 31 and 32: All
Section 33: SE¼
Township 9 South, Range 95 West, 6th P.M.
Section 25: SE¼, E½ SW¼
Section 35: SE¼
Township 10 South, Range 94 West, 6th P.M.
Section 4: All
Sections 28 through 30: N½
Township 10 South, Range 95 West, 6th P.M.
Sections 12 through 13: All
Section 25: N½
9. On April 18, 2006, Laramie Energy, LLC, by its attorney, filed with the Commission a verified application for an order to allow the equivalent of one well per 10 acres to be optionally drilled in each 160-acre drilling and spacing unit, for the production of gas from the Mesaverde Formation, with the permitted well to be located no closer than 100 feet from the boundary of the unit or lease line, if unspaced, without exception granted by the Director. In cases where the application lands abut or corner lands where the Commission has not, at the time of the drilling permit application, granted the right to drill 10-acre density Mesaverde Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit or lease line, if unspaced, abutting or cornering such lands, without exception granted by the Director, for the below-listed lands:
Township 9 South, Range 94 West, 6th P.M.
Sections 31 and 32: All
Section 33: S½
Township 9 South, Range 95 West, 6th P.M.
Section 25: SE¼, E½ SW¼
Section 35: SE¼
Section 36: E½, SW¼, E½ NW¼
Township 10 South, Range 94 West, 6th P.M.
Sections 4 through 9: All
Sections 16 through 21: All
Sections 28 through 30: N½
Township 10 South, Range 95 West, 6th P.M.
Section 1: All
Sections 12 through 13: All
Section 24: All
Section 25: N½
10. On May 22, 2006, EnCana Oil & Gas (USA) Inc. (“EnCana”), by its attorney, submitted a protest to the application alleging that EnCana owned working interest in portions of the Application Lands and that granting the Application would constitute waste in this portion of the field.
11. On May 25, 2006, Laramie agreed to withdraw the below-listed lands containing a working interest owned by EnCana from its application. Based on this revision, EnCana agreed to withdraw its protest to the application.
Township 9 South, Range 94 West, 6th P.M.
Section 32: NW¼ NE¼, SE¼ NE¼, S½ NW¼ SE¼
Section 33: E½ SE¼, NW¼ SE¼, NW¼ SW¼
Township 9 South, Range 95 West, 6th P.M.
Section 25: E½ SE¼, SE¼ SW¼
Township 10 South, Range 94 West, 6th P.M.
Section 4: E½ SE¼, SE¼, SW¼ NE¼, SE¼ SW¼
Section 7: NW¼, SE¼
Section 9: E½
Section 16: NE¼, N½ SE¼, E½ NW¼, NW¼ NW¼
Section 17: NW¼, SE¼, SW¼
Section 18: SE¼
Section 19: W½ SW¼, SE¼ NE¼
Sections 20 and 21: All
Sections 28 and 29: N½
Section 30: NW¼ NW¼, E½ NE¼
Township 10 South, Range 95 West, 6th P.M.
Section 1: SE¼ SE¼, E½ SW¼ SE¼
Sections 12 and 13: All
Section 24: All
Section 25: N½
12. On May 26, 2006, subsequent to the administrative hearing, the Board of County Commissioners of Mesa County submitted a letter to the COGCC staff indicating they had no specific comments or concerns regarding Laramie’s applications.
Township 10 South, Range 95 West, 6th P.M.
Section 12: W½
Section 24: W½
Section 25: NW¼
14. Testimony and exhibits presented at the administrative hearing showed that the Mesaverde Formation is composed of the Williams Fork Formation and the Iles Formation, which is further composed of the Rollins, the Cozzette, and the Corcoran Formations.
15. Testimony and exhibits presented at the administrative hearing showed that the gas saturated interval of the Williams Fork Formation in the application area increases to the northeast and is not present to the southwest.
16. Testimony and exhibits presented at the administrative hearing showed that the gas saturated interval of the Williams Fork Formation in the application area increases to the northeast, the variability in the thickness of the net sand in the Cozzette and Corcoran Formations and the depositional discontinuities in the sands of the Williams Fork Formation and the Cozzette and Corcoran Formations.
17. Testimony and exhibits presented at the administrative hearing showed that wells in the East Plateau Field contain an average of 136 feet of net Williams Fork pay interval and 57 feet of net Iles pay interval, and that the ultimate recovery from wells drilled on 10 acre density in this area will be approximately 0.55 bcf per well.
18. Testimony and exhibits presented at the administrative hearing showed that drilling wells on 10-acre density is required to recover all oil and gas in the application area and that wells drilled on 10-acre density in the application area would be economic.
19. The above-referenced testimony and exhibits show that the proposed density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
20. Laramie Energy, LLC, agreed to be bound by oral order of the Commission.
21. Based on the facts stated in the verified amended application and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to allow the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the unit boundary, for certain lands in Townships 9 through 10 South, Ranges 94 through 95 West, 6th P.M., for production of gas from the Mesaverde Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that equivalent of one well per 10 acres is hereby approved to be optionally drilled in each 160-acre drilling and spacing unit, for the production of gas from the Mesaverde Formation, with the permitted well to be located no closer than 100 feet from the boundary of the unit or lease line, if unspaced, without exception granted by the Director. In cases where the application lands abut or corner lands where the Commission has not, at the time of the drilling permit application, granted the right to drill 10-acre density Mesaverde Formation wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit or lease line, if unspaced, abutting or cornering such lands, without exception granted by the Director, for the amended lands described below:
Township 9 South, Range 94 West, 6th P.M.
Section 31: All
Section 32: W½, NE¼ NE¼, SW¼ NE¼, S½ SE¼, NE¼ SE¼, N½ NW¼ SE¼
Section 33: S½ SW¼, NE¼ SW¼, SW¼ SE¼
Township 9 South, Range 95 West, 6th P.M.
Section 25: S½ SE¼, SE¼ SW¼
Section 35: SE¼
Section 36: E½, SW¼, E½ NW¼
Township 10 South, Range 94 West, 6th P.M.
Section 4: NW¼ NE¼, NW¼, N½ SW¼, SW¼ SW¼
Section 5: All
Section 6: All
Section 7: NE¼, SW¼
Section 8: All
Section 9: W½
Section 16: SW¼, S½ SE¼, SW¼ NW¼
Section 17: NE¼
Section 18: W½, NE¼
Section 19: NW¼, W½ NE¼, SE¼, E½ SW¼, NE¼ NE¼
Section 30: W½ NE¼, E½ NW¼, SW¼ NW¼
Township 10 South, Range 95 West, 6th P.M.
Section 1: N½, SW¼, N½ SE¼, W½ SW¼ SE¼
IT IS FURTHER ORDERED, that no more than four (4) Mesaverde Formation wells shall be drilled on the application lands per governmental quarter quarter section. Mesaverde Formation wells to be drilled on the application lands shall be drilled from the surface either vertically or directionally from no more than one (1) pad located on any quarter quarter section unless exception is granted by the Director.
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.
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