BEFORE THE
OF THE STATE OF
|
IN
THE MATTER OF PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN
OPERATIONS IN THE RULISON AND PARACHUTE FIELDS, |
) ) ) ) |
CAUSE
NOS. 139 AND 440 ORDER
NOS. 139-79 AND 440-49 |
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 9:00 a.m. on August 28, 2007, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to vacate the 640-acre drilling and spacing unit consisting of Section 22, Township 7 South, Range 95 West, 6th P.M., established in Order No. 139-16 and establish 40-acre drilling and spacing units for said Section 22, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations. The order should allow the equivalent of one (1) well per 20 acres, with the permitted well to be located 200 feet from the boundaries of the drilling and spacing unit and 400 feet from an existing Williams Fork Formation and Iles Formation wells, absent an exception from the Commission.
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
5. On April 24, 2006, the Commission issued
Order No. 440-32, which among other things, allowed the equivalent of one well
per 20 acres with a downhole location anywhere in the 640-acre drilling and
spacing unit, no closer than 200 feet from the boundaries of the unit and no closer
than 400 feet from any existing well, for
the production of gas and associated hydrocarbons from the Williams Fork
Formation, for Section 22, Township
7 South, Range 95 West, 6th P.M.
6. Rule 318.a.
of the Commission Rules and Regulations requires that wells drilled in excess
of two thousand five hundred (2500) 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 (1200) feet from any other producible or drilling oil or gas well
to the same common source of supply.
Section 22, Township 7 South, Range 95 West, 6th P.M. is
subject to this Rule for the Iles Formation.
7. On June 1, 2007, EnCana, by its attorney,
filed with the Commission a verified application for an order to vacate the
640-acre drilling and spacing unit consisting of Section 22, Township 7 South,
Range 95 West, 6th P.M., established in Order No. 139-16 and
establish 40-acre drilling and spacing units for said Section 22, for the
production of gas and associated hydrocarbons from the Williams Fork Formation.
The order should continue to allow the equivalent of one (1) well per 20 acres,
with the permitted well to be located 200 feet from the boundaries of the
drilling and spacing unit and 400 feet from an existing Williams Fork
Formation well, absent an exception from
the Commission.
8. On July 18, 2007, EnCana, by its attorney,
filed with the Commission an amended application to establish 40-acre drilling
and spacing units for said Section 22, for the production of gas and associated
hydrocarbons from the Iles Formation, and allow the equivalent of one (1) well
per 20 acres, with the permitted well to be located 200 feet from the
boundaries of the drilling and spacing unit and 400 feet from an existing Iles Formation
well, absent an exception from the Commission.
9. On July 3
and 10, 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, and subsequently.
10. Testimony
and exhibits submitted in support of the application showed that EnCana is the
majority leasehold owner in the application lands.
11. Testimony
and exhibits submitted in support of the application showed that the Williams
Fork and Iles Formations are members of the Mesaverde Group and are common
sources of supply. Additional testimony
indicated that due to the heterogeneity of the formations, increased density is
necessary to recover the reserves.
12. Testimony
and exhibits submitted in support of the application showed the location of the
existing and proposed spacing units.
Additional exhibits also showed existing Mesaverde Formation and Iles
Formation wells and the structure on top of the Rollins Sandstone.
13. Testimony
and exhibits submitted in support of the application showed that the original gas in place (OGIP) for the Williams Fork
Formation for the application lands is between 70 and 80
14. Testimony
and exhibits submitted in support of the application showed that an average
porosity of 9.4% and an average permeability of 0.039 md in the Federal 20-10 Well. In the
15. Testimony
and exhibits submitted in support of the application showed that one well per
20 acres will recover incremental reserves preventing waste, while minimizing
interference between wells and prevent the drilling of unnecessary wells. Additional testimony and exhibits showed the
average estimated ultimate recovery (EUR) in the most mature area of the south
Parachute Field is approximately 1.04 BCF for a Williams Fork Formation
well. Further testimony and exhibits
showed that the average drainage radius is between 17 acres and 22 acres for
each well.
16. Testimony
and exhibits submitted in support of the application showed that well density of
20 acres in the application area will increase the EUR per section for the
Williams Fork Formation. Additional
testimony indicated that one well per 20 acres versus one well per 40 acres provides
an increased recovery factor of gas in place from 33% to 49%, with an
incremental recovery of 14.4 BCF.
18. EnCana Oil & Gas (USA) Inc. 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 based on the Hearing Officer
review of the application under Rule 511.b., the Commission should enter an order to vacate the 640-acre drilling and spacing unit consisting
of Section 22, Township 7 South, Range 95 West, 6th P.M.,
established in Order No. 139-16 and establish 40-acre drilling and spacing
units for said Section 32, for the production of gas and associated
hydrocarbons from the Williams Fork and Iles Formations.
ORDER
NOW, THEREFORE, IT IS
ORDERED, that the 640-acre drilling and spacing unit consisting of Section 22,
Township 7 South, Range 95 West, 6th P.M., as established in Order
No. 139-16 for the production of gas and associated hydrocarbons from the
Williams Fork Formation is hereby vacated.
IT IS FURTHER ORDERED, that 40-acre drilling and
spacing units are hereby established for Section 22, Township 7 South, Range 95
West, 6th P.M., for the production of gas and associated hydrocarbons
from the Williams Fork and Iles Formation.
IT IS FURTHER ORDERED, that the equivalent of one (1)
well per 20 acres is hereby allowed, with the permitted well to be located 200
feet from the boundaries of the drilling and spacing unit and 400 feet from an
existing Williams Fork Formation well and 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 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
By____________________________________
Patricia C. Beaver, Secretary
Dated at
September
10, 2007