BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION                   )           CAUSE NO. 510

AND ESTABLISHMENT OF FIELD RULES TO               )

GOVERN OPERATIONS IN THE GRAND VALLEY        )           ORDER NO. 510-45

FIELD, GARFIELD COUNTY, COLORADO                     )

 

 

REPORT OF THE COMMISSION

 

                        This cause came on for hearing before the Commission at 4:30 p.m. on October 27, 2008, in the Columbine Room at the Sheraton Hotel, 1550 Court Place, Denver, Colorado, for an order to allow the equivalent of one well per 10 acres for certain lands in Townships 5 and 7 South, Ranges 96 and 97 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.    Marathon Oil Company (“Marathon”), 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 Oil and Gas Conservation Commission requires that wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located 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 for the Williams Fork Formation:

 

Township 5 South, Range 96 West, 6th P.M.

Section 19:    NE¼ NE¼, S½ NE¼

 

Township 7 South, Range 97 West, 6th P.M.

Section 14:    E½

Section 21:    Lot 1, 2, Tract 115B

 

5.    On May 16, 1994, the Commission issued Order No. 510-1 which among other things, established setback rules for certain lands, including the E½ of Section 14, Township 7 South, Range 97 West, 6th P.M., wherein any permitted well shall be located no closer than 400 feet from the boundaries of any lease line and no closer than 800 feet from an existing Williams Fork Formation well.

 

6.    On August 11, 2008, Marathon, by its attorney, filed with the Commission a verified application for an order to allow the equivalent of one (1) well per 10 acres for the below-listed lands for production of gas and any associated hydrocarbons from the Williams Fork Formation:

 

Township 5 South, Range 96 West, 6th P.M.

Section 19:    NE¼ NE¼, S½ NE¼

 

Township 7 South, Range 97 West, 6th P.M.

Section 14:    E½

Section 21:    Lot 1, 2, Tract 115B

All future Williams Fork Formation wells to be drilled upon the application lands should be located downhole anywhere within the application lands but no closer than 100 feet from a lease line or the boundaries of the application lands without exception being granted by the Director of the Oil and Gas Conservation Commission.  In cases where the application lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the application lands so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.

Except as previously authorized by order of the Commission, 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 (or lots or parcels approximately equivalent thereto) unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception.

7.    On October 9, 2008, Marathon, 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 Marathon is the leasehold owner of the entirety of the application lands.  Additional testimony showed that lands surrounding the application lands have been approved for 10-acre well density.

9.    Testimony and exhibits submitted in support of the application showed that the Williams Fork Formation is continuous underlying the application lands and is composed of lenticular fluvial sandstones which are a common source of gas production.  Additional testimony showed that the average porosity of Williams Fork Formation underlying the application lands is 5%, and that the depositional environment and permeability barriers support 10-acre well density to promote more efficient reservoir drainage while protecting correlative rights.

10.  Testimony and exhibits submitted in support of the application showed that increasing well density to 10 acres increases the recovery factor for the Williams Fork Formation on the application lands to approximately 76% and an average estimated ultimate recovery of 1.2 BCF.  Additional testimony showed that one well per 10 acres will recover incremental reserves, preventing waste, while having no adverse affect on correlative rights.  Further testimony, based on production data and decline curve analysis from 10-acre density wells in the vicinity of the application lands, showed that 10-acre well density for the Williams Fork Formation underlying the application lands will be economic and will efficiently drain gas and associated hydrocarbons from the reservoir while having no adverse affect on correlative rights.

11.  The above-referenced testimony and exhibits show that the proposed increased 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.

 

12.  Marathon Oil Company agreed to be bound by oral order of the Commission. 

 

13.  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 equivalent of one well per 10 acres for certain lands in Townships 5 and 7 South, Ranges 96 and 97 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that the equivalent of one (1) well per 10 acres is hereby allowed for the below-listed lands for production of gas and associated hydrocarbons from the Williams Fork Formation:

 

Township 5 South, Range 96 West, 6th P.M.

Section 19:    NE¼ NE¼, S½ NE¼

 

Township 7 South, Range 97 West, 6th P.M.

Section 14:    E½

Section 21:    Lot 1, 2, Tract 115B

 

IT IS FURTHER ORDERED, that all future Williams Fork Formation wells to be drilled upon the application lands shall be located downhole anywhere within the application lands but no closer than 100 feet from a lease line or the boundaries of the application lands without exception being granted by the Director of the Oil and Gas Conservation Commission.  In cases where the application lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the application lands so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.

 

IT IS FURTHER ORDERED, that except as previously authorized by order of the Commission, wells to be drilled under this application shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto), unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception.

 

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 October, 2008, as of October 27, 2008.

           

                                                                        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

October 28, 2008