BEFORE
THE
OF
THE STATE OF
IN THE MATTER OF
PROMULGATION AND ) CAUSE NO. 510
ESTABLISHMENT OF FIELD
RULES TO )
GOVERN OPERATIONS IN THE
RULISON ) ORDER NO. 510-36
FIELD,
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 establish 40-acre drilling and
spacing units for certain lands in Section 7 South, Range 96 West 6th P.M., for
the production of gas and associated hydrocarbons from the Williams Fork and
Iles Formations of the Mesaverde Group and to allow the equivalent of one (1)
well per 10 acres.
FINDINGS
The
Commission finds as follows:
1. Noble Energy Inc. ("Noble"),
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 May 16, 1994, the Commission issued Order
No. 510-1, which among other things, permitted wells to be located no closer
than 400 feet from the boundaries of any lease line and no closer than 800 feet
from any existing Williams Fork Formation wells for certain lands including
Sections 26 and 35, Township 7 South, Range
96 West, 6th P.M., for the production of gas and associated
hydrocarbons from the Williams Fork Formation of the Mesaverde Group.
5. 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. Sections
26 and 35, Township 7 South, Range 96 West,
6th P.M. are subject to this Rule for the Iles Formation.
6. On July 6, 2007, Noble, by
its attorneys, filed with the Commission a verified application for an order to
establish 40-acre drilling and spacing units for the below-listed lands, for the production of gas
and associated hydrocarbons from the Williams Fork and Iles Formations of the
Mesaverde Group and to allow the equivalent of one (1) well per 10 acres:
Township 7
South, Range 96 West, 6th P.M.
Section 26: S½ SE¼, SE¼ SW¼
Section
35: NE¼, N½ SE¼, E½ NW¼
That as to all future
Williams Fork Formation and Iles Formation wells to be drilled upon the
application lands, each well may be located downhole in the established
drilling and spacing unit but no closer than one hundred (100) feet from the
unit boundary unless the boundary abuts or corners lands in respect of which
the Commission has not at the time of the drilling permit application granted
the right to drill ten (10) acre density wells, in which event the well shall
be drilled downhole no closer than 200 feet from that portion of the unit
boundary which so abuts or corners the lands in respect of which ten (10) acre
density downhole drilling for Williams Fork Formation or Iles Formation well
has not been ordered by the Commission.
Applicant
commits that 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 unless exception is granted by the
Director of the Colorado Oil and Gas Conservation Commission, and that 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. In this manner the wells will be economic as
to both formations.
7. On August 14 and 21, 2007, Noble, 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.
8. Testimony and exhibits submitted in support
of the application showed that Noble is the majority leasehold owner in the application
lands.
9. 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.
10. Testimony and exhibits submitted in support
of the application showed that the mean estimated ultimate recovery (EUR) for
wells in the areas adjacent to the application lands is approximately 1,020
MMCF.
11. Testimony
and exhibits submitted in support of the application showed a pressure gradient
of 0.55 psi per foot was used to estimate the average initial pressure for the
pay zones within the Williams Fork Formation for the calculation of an initial
formation volume factor. This was based
on the Williams Production RMT Company (“Williams”) report dated April 24,
2006. Williams used this reservoir
pressure in support of various Commission orders, including Order No. 510-4,
where reservoir pressure data was originally presented to the Commission to
support increased well density applications for the Williams Fork Formation in
the vicinity of the application lands.
No wireline formation test pressures have been taken on the application lands
so testimony relies on the pressure data from the Williams Report.
12. Testimony and exhibits submitted in
support of the application showed that for a 10-acre area, the original gas in
place is estimated at 1,525 MMCF. Additional
testimony indicated that based on a recovery factor of 70%, recoverable
reserves of 1,020 MMCF represent a 10-acre drainage area for wells drilled
within the application lands.
13. Testimony and exhibits submitted in
support of the application showed that current
well density will not effectively drain the Williams Fork and Iles Formations. Additional testimony indicated that an average
of approximately 10 acres are drained by one well in the application area.
14. The
above-referenced testimony and exhibits show that the proposed spacing and
density will allow more efficient reservoir drainage, will prevent waste, will
assure a greater ultimate recovery of gas, and will not violate correlative
rights.
15. Noble
Energy 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 establish
40-acre drilling and spacing units for the
below-listed lands, for the production of gas and associated
hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group
and to allow the equivalent of one (1) well per 10 acres:
Township 7
South, Range 96 West, 6th P.M.
Section 26: S½ SE¼, SE¼ SW¼
Section
35: NE¼, N½ SE¼, E½ NW¼
ORDER
NOW, THEREFORE,
IT IS ORDERED, that 40-acre drilling and
spacing units are hereby established for the below-listed lands, for the
production of gas and associated hydrocarbons from the Williams Fork and Iles
Formations of the Mesaverde Group, allowing the equivalent of one (1) well per
10 acres:
Township 7
South, Range 96 West, 6th P.M.
Section 26: S½ SE¼, SE¼ SW¼
Section
35: NE¼, N½ SE¼, E½ NW¼
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.
ENTERED this ______ day of September, 2007, as of August 28, 2007.
OIL
OF
THE STATE OF
By____________________________________
Patricia
C. Beaver, Secretary
Dated at
September 11, 2007