BEFORE THE OIL
OF THE STATE OF
IN THE MATTER OF THE
PROMULGATION AND ) CAUSE NO. 440
ESTABLISHMENT OF FIELD RULES
TO GOVERN )
OPERATIONS IN THE PARACHUTE
FIELD, ) ORDER NO. 440-45
REPORT
OF THE COMMISSION
This cause came on for hearing before the Commission
at 9:00 a.m. on
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. On
Township 7 South, Range 94 West,
6th P.M.
Sections 16 and 17: All
Township 7 South, Range 95 West,
6th P.M.
Section 10: W½
Sections 15 and 16: All
Sections 19 through 22: All
Sections 27 through 34: All
Township 7 South, Range 96 West,
6th P.M.
Sections 24 and 25: All
Section 36: All
5. On
That as to all future Williams Fork Formation and
Iles Formation wells to be drilled upon the application lands, each well may be
located anywhere downhole in the established drilling and spacing unit but no
closer than 200 feet from the boundaries of the unit and 400 feet from any
existing Williams Fork Formation well, without exception being granted by the
Director of the Oil and Gas Conservation Commission.
That all Williams Fork Formation and Iles Formation wells drilled upon the application lands will be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission. In addition, 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.
6. On April
24, 2007, 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.
7. Testimony and exhibits submitted in support
of the application showed that EnCana is a working interest owner and operator
in the application lands. Additional testimony
and exhibits showed that the minerals underlying the N½ and S½ of Section 19
are both federal and fee.
8.Testimony
and exhibits submitted in support of the application showed that the Williams
Fork and Iles Formations are members of the Mesaverde Group, that the Williams
Fork Formation has an average porosity of 8.6%, with an
average permeability of 0.035 millidarcies, and that the Iles Formation has an
average porosity of 11.1%, with an average permeability of 0.041 millidarcies.
9. Testimony
and exhibits provided at previous administrative hearings reflect the fluvial
nature of the Williams Fork Formation, its extreme heterogeneity, and the
necessity of increased drilling on a 20-acre basis to efficiently and
economically recover the reserves.
10. Testimony
and exhibits submitted in support of the application showed that the average
estimated ultimate recovery (“EUR”) is approximately 1.04 BCF per Williams Fork
Formation well, and the average drainage radius is between 16.8 acres and 21
acres for each Williams Fork Formation well.
The Iles Formation is economic only as an add-on to Williams Fork
Formation production.
11. Testimony
and exhibits submitted in support of the application showed that the current
well density will not effectively drain the Williams Fork and Iles Formations. Additional testimony indicated that an average
of approximately 20 acres are drained by one well in the application area.
12. Testimony
and exhibits submitted in support of the application showed that increasing
well density to 20 acres in the application area will increase the EUR per
section for the Williams Fork and Iles Formations. Specifically, the original gas in place (“OGIP”)
for the application lands is between 85 and 95
13. Testimony
submitted in support of the application indicated that pressure depletion has
not been a significant issue with 20-acre wells completed in the Mesaverde
Formation. Additional testimony
indicated that very isolated, minimal pressure depletion has been seen when a new
well well is drilled on axis according to the drainage model related to
the principal stress orientation. Further testimony indicated that in
order to maximize recovery efficiencies and minimize rate
acceleration, EnCana does not locate new 20-acre wells along this axis of
preferential drainage and higher permeability.
14. No
protests to the application have been filed with the Commission or the
Applicant.
15. EnCana
Oil & Gas (USA) Inc. agreed to be bound by oral order of the Commission.
16. 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 segregate the 640-acre drilling and
spacing unit consisting of Section 19, Township 7 South, Range 95 West, 6th
P.M. into two 320-acre drilling and spacing units consisting of the N½ and the
S½ of Section 19, and increase the number of wells which can be optionally
drilled into and produced from the Williams Fork and Iles Formations, the
equivalent of one well per 20 acres, with each well located no closer than 200
feet from the boundaries of the drilling and spacing unit and no closer than
400 feet from any existing Williams Fork Formation or Iles Formation well, without
exception being granted by the Director of the Oil and Gas Conservation
Commission.
ORDER
NOW, THEREFORE, IT IS
ORDERED, that the 640-acre drilling and spacing unit consisting of Section 19,
Township 7 South, Range 95 West, 6th P.M. is hereby segregated into
two 320-acre drilling and spacing units consisting of the N½ and the S½ of said
Section 19, for production from the Williams Fork and Iles Formations.
IT IS FURTHER ORDERED, that
the equivalent of one well per 20 acres is hereby approved for production from the
Williams Fork and the Iles Formations, and that the setback requirements shall
be 200 feet from the boundaries of the drilling and spacing
unit and 400 feet from any existing
Williams Fork Formation or Iles Formation well, absent an exception from the
Commission.
IT IS FURTHER ORDERED, that wells to be drilled under
this application 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.
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 the
filing for judicial review.
ENTERED this ______ day of May,
2007, as of May 10, 2007.
OIL
OF
THE STATE OF
By____________________________________
Patricia
C. Beaver, Secretary
Dated at
May 25, 2007