BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF
|
IN THE MATTER
OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE TRAIL
RIDGE FIELD, |
) CAUSE NO. 510 ) ) ORDER NO. 510-35 ) |
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission
at 9:00 a.m. on May 10, 2007, in Suite 801, The Chancery Building, 1120 Lincoln
Street, Denver, Colorado, for an order to allow the drilling of additional
wells, the equivalent of one well per 10 acres, for certain lands in Township 5
South, Range 96 West, 6th P.M., for the production of gas and
associated hydrocarbons from the Williams Fork Formation.
FINDINGS
The
Commission finds as follows:
1. ConocoPhillips Company
(“ConocoPhillips”), 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 Colorado Oil and Gas Conservation Commission requires wells drilled in
excess of 2,500 feet in depth to be located not less than 600 feet from any
lease line, and 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 below-listed lands are subject to this
rule:
Township
5 South, Range 96 West, 6th P.M.
Section
6: All
Section
7: All
Section
17: W½
Section 18: All
5. On March
22, 2005, the Commission issued Order No. 510-13, which among other things,
allowed optional drilling of wells equivalent to one per 10 acres, with the
permitted wells to be located anywhere within the application lands but no
closer than 100 feet from any lease line without exception being granted by the
Director, except that (1) with respect to lease lines abutting or cornering
lands for which the Commission has not at the time of the drilling permit
application granted the right to drill 10-acre density wells, the well shall be
located downhole no closer than 200 feet from the lease line so abutting or
cornering such lands, and (2) no more than four (4)
Williams Fork Formation wells should be drilled downhole per governmental
quarter quarter section, for certain lands, including the following:
Township 5 South, Range 96 West, 6th P.M.
Section 2: W½,
less and except those portions conveyed by Union Oil Company of
Sections 3 through 5: All
Sections 8 through 10: All
Section 11: W½, less and except those portions
conveyed by Union Oil Company of
Section 14: W½,
SE¼, W½ NE¼
Sections 15 and 16: All
Section 17: E½
Sections 21 through 28: All
Section 33: N½ N½, less and except the West 32 rod of
the NW¼ NW¼ containing 16 acres, more or less
6. On February
8, 2006, the Commission issued Order No. 510-18, which among other things,
allowed optional drilling of wells for the production of gas and associated
hydrocarbons from the Williams Fork Formation, the equivalent of one well per
10 acres, with the permitted wells to be located anywhere within the
application lands but no closer than 100 feet from the boundary of any lease
line without exception being granted by the Director, except that with respect
to lease lines abutting or cornering lands for which the Commission has not at
the time of the drilling permit application granted the right to drill 10-acre
density wells, the well shall be located downhole no closer than 200 feet from
the lease line so abutting or cornering such lands, and no more than four (4)
Williams Fork Formation wells should be drilled downhole per governmental
quarter quarter section, for certain lands, including the following:
Township 5 South, Range 96 West, 6th P.M.
Section 19: S½
Section 20: All
Sections 29 through 32: All
Section 33: S½
Section 35: S½
7. On August
16, 2006, the Commission issued Order No. 510-25, which among other things,
allowed optional drilling of wells for the production of gas and associated
hydrocarbons from the Williams Fork Formation, the equivalent of one well per
10 acres, with the permitted wells to be located anywhere within the
application lands but no closer than 100 feet from the boundary of any lease
line without exception being granted by the Director, except that with respect
to lease lines abutting or cornering lands for which the Commission has not at
the time of the drilling permit application granted the right to drill 10-acre
density wells, the well shall be located downhole no closer than 200 feet from
the lease line so abutting or cornering such lands, and no more than four (4)
Williams Fork Formation wells should be drilled downhole per governmental
quarter quarter section, for certain lands, including the following:
Township 5 South, Range 96 West, 6th P.M.
Section 19:
Section 33: S½ N½ and the West 32 rods of the NW¼ NW¼, containing 176 acres,
more or less
Section 36: SW¼,
containing 160 acres more or less
8. On March
20, 2007, ConocoPhillips Company, by its attorney, filed with the Commission a
verified application for an order to allow the drilling of additional wells,
the equivalent of one well per 10 acres for the below-described lands, for the
production of gas and associated hydrocarbons from the Williams Fork
Formation. All future Williams Fork
Formation wells should be located downhole anywhere upon the application lands,
but no closer than 100 feet from the boundaries of the unit or any lease line,
without exception being granted by the Director, except that (1) with respect
to units or lease lines abutting or cornering lands for which the Commission
has not at the time of the drilling permit application granted the right to
drill 10-acre density wells, the well shall be located downhole no closer than 200
feet from the boundary of the drilling unit or lease line so abutting or
cornering such lands, and (2) no more than four (4) Williams Fork Formation
wells should be drilled downhole per governmental quarter quarter section, and
if topographically feasible, using one well pad per quarter quarter section:
Township
5 South, Range 96 West, 6th P.M.
Sections
6 and 7: All
Section
17: W½
Section
18: All
9.
On April 27, 2007, ConocoPhillips, 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.
10. Testimony and exhibits submitted in support
of the application indicated that the owners affected by the application were
sent copies of the application on March 20, 2007, by
11. Testimony and exhibits submitted
in support of the application showed that the Bureau of Land Management (“BLM”)
owns the mineral estate in the application lands and that EnCana Oil & Gas
(USA) Inc. and ConocoPhillips have lease rights within the application lands. Testimony and exhibits submitted also
demonstrated that there are two surface owners, BLM and by Rueben G. Oldland
and Stephanie D. Oldland as Joint Tenants, in the application lands.
12. Testimony and exhibits submitted
in support of the application indicated that the Williams Fork Formation is
continuous throughout the application lands, and that the Williams Fork
Formation is composed of lenticular fluvial sandstones with interbedded
siltstone and shale. Testimony and
exhibits further indicated that the sands within the Williams Fork Formation are
not continuous in the vertical and lateral extents.
13. Testimony and exhibits submitted
in support of the application showed that the sandstone bodies are isolated and
range in thickness from 0.5 to 40.1 feet, with an average of 9.3 feet, and
width ranges from 29 to 2,791 feet, with an average width of 526 feet.
14. Testimony and exhibits submitted
in support of the application showed that some sands are bypassed with 40-acre and
20-acre well density and are encountered with 10-acre density, that the
Williams Fork Formation is a common source of supply, and that it is a tight,
heterogeneous reservoir that supports 10-acre density.
15. Testimony and exhibits submitted
in support of the application showed that wells drilled as close as 660 feet,
which is equivalent to 10-acre density, would not penetrate the same sand
bodies, even though they appear to correlate on cross sections from logs in the
vicinity of the application lands.
16. Testimony and exhibits submitted
in support of the application showed that the application lands are continuous
and consistent with the surrounding 10-acre density areas, and that it is
necessary to develop the Williams Fork Formation on 10-acre density to ensure
that a majority of the reservoir sands are penetrated resulting in a much
higher recovery factor.
17. Testimony
and exhibits submitted in support of the application showed that although ConocoPhillips
has not performed pressure testing on the application lands, it has reviewed
the pressure data that resulted in Order Nos. 479-7, 440-19, 139-34 and 510-4 and
found it to be analogous with the application lands.
18. Testimony and exhibits submitted
in support of the application showed original gas-in-place (OGIP) of 129 BCF
per section in the application lands based on volumetric analysis of a log from
an analogous-offset well drilled by ConocoPhillips.
19. Testimony and exhibits submitted
in support of the application demonstrate that ConocoPhillips expects an
estimated ultimate recovery (EUR) from 40-acre and 20-acre wells drilled on the
application lands of 1.4 BCF per well and incremental EUR from 10-acre wells of
1.1 BCF per well. Based on this
analysis, additional resource recovered from the 10-acre wells is expected to
be 35.2 BCF per 40-acre section.
20. Testimony and exhibits submitted in support of the application showed payout for wells drilled on 10-acre density would occur in 4.5 years, with a rate of return of 18%, making these wells economic for ConocoPhillips.
21. The above-referenced
testimony and exhibits show that the proposed 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.
22. ConocoPhillips Company agreed
to be bound by an oral order of the Commission.
23. 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 drilling of additional wells the equivalent of one
well per 10 acres for certain lands in Township 5 South, Range 96 West, 6th
P.M., for the production of gas and associated hydrocarbons from the Williams
Fork Formation.
ORDER
NOW,
THEREFORE IT IS ORDERED, that additional wells are hereby approved, the
equivalent of one well per 10 acres, for production from the Williams Fork
Formation for the below-described lands:
Township
5 South, Range 96 West, 6th P.M.
Sections
6 and 7: All
Section
17: W½
Section 18: All
IT
IS FURTHER ORDERED, that as to all future Williams Fork Formation wells to be
drilled upon the above described lands, each well shall be located anywhere
upon the lands but no closer than 100 feet from the boundaries of any approved
federal unit or any lease line, without exception being granted by the
Director, except that (1) with respect to lease lines abutting or cornering
lands for which the Commission has not at the time of the drilling permit
application granted the right to drill 10-acre density wells, unless said lease
line abutting on or cornering the lands is within an approved federal unit, the
well shall be located downhole no closer than 200 feet from the boundary of the
lease line so abutting or cornering such lands, and (2) no more than four (4) Williams
Fork wells may be drilled downhole per governmental quarter quarter section.
IT
IS FURTHER ORDERED, that the permitted wells shall be drilled, on average, if
topographically feasible throughout the lands, 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
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
AND GAS CONSERVATION COMMISSION
OF
THE STATE OF
By:______________________________________
Patricia
C. Beaver, Secretary
Dated at
May 25, 2007