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. 510-48
FIELD, GARFIELD COUNTY, COLORADO ) CORRECTED
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 9:00 a.m. on March 30, 2009, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to allow the equivalent of one well per 10 acres for certain lands in Townships 5 through 7 South, Ranges 96 through 97 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork or Iles Formations, with the permitted well to be located no closer than 100 feet from the boundary of the application lands.
FINDINGS
The Commission finds as follows:
1. Oxy USA WTP LP (“Oxy”), 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 unspaced and subject to this Rule.
Township 7 South, Range 97 West, 6th P.M.
Section 8: The E½ of Tract 39 and 1.26 acres out of the NW corner of Tract 39
Section 17: Tract 89
Section 18: Tracts 89 and 91
Section 21: Tracts 112B and 112C
Section 22: Tract 112B
Section 26: Tracts 121C and 121B
5. On July 11, 2005, corrected August 18, 2005, the Commission issued Order No. 510-15, which among other things, allowed the equivalent of one well per 10 acres to be drilled on certain lands including those listed below, for the production of gas and associated hydrocarbons from the Williams Fork Formation, with the permitted well to be located no closer than 100 feet from the outside boundary:
Township 6 South, Range 97 West, 6th P.M.
Section 3: Lots 7 through 16, and S½
Sections 4 and 5: All
Section 6: Lots 13 through 18 and Lots 22 through 25,
E½ SW¼ and SE¼
Section 8: E½, E½ NW¼, SW¼ NW¼, and SW¼
Sections 9 and 10: All
Sections 15 through 17: All
Section 18: E½ and SE¼ NW¼
Section 19: NE¼ and E½ NW¼
Section 20: All
Section 29: All
Section 32: All
Township 7 South, Range 97 West, 6th P.M.
Section 5: Subtracts A and B of Tract 82, Subtracts A and B of Tract 83, and the portions of Tracts 80 and 81 lying in Section 5
Sections 6 and 7: All
6. On January 9, 2006, corrected February 27, 2006, the Commission issued Order No. 510-18, which among other things, established 320-acre drilling and spacing units and allowed the equivalent of one well per 10 acres to be drilled on certain lands including those listed below, for the production of gas and associated hydrocarbons from the Williams Fork Formation, with the permitted well to be located no closer than 100 feet from the unit boundary:
Township 5 South, Range 96 West, 6th P.M.
Section 31: SE ¼ and Lots 1 and 2
Township 6 South, Range 97 West, 6th P.M.
Section 2: S½
Section 11: W½ and SE ¼
Section 14: S½
Sections 21 and 22: All
Section 28: All
Section 33: All
7. On April 24, 2006, the Commission issued Order No. 510-20, which among other things, allowed the equivalent of one well per 10 acres to be drilled on certain lands including those listed below, for the production of gas and associated hydrocarbons from the Williams Fork Formation, with the permitted well to be located no closer than 100 feet from the unit boundary:
Township 6 South, Range 97 West, 6th P.M.
Section 14: N½
Section 23: NW¼
Section 27: All
8. On April 24, 2006, the Commission issued Order No. 510-26, which among other things, allowed the equivalent of one well per 10 acres to be drilled on the below-listed lands, for the production of gas and associated hydrocarbons from the Williams Fork Formation, with the permitted well to be located no closer than 100 feet from the outside boundary:
Township 6 South, Range 97 West, 6th P.M.
Section 34: Lots 1 and 2
Township 7 South, Range 96 West, 6th P.M.
Section 9: S½
Section 10: SW¼
Section 15: NW¼
Section 16: All
Section 17: NE¼ and S½
Section 18: S½
Section 19: N½ and SW¼
Section 20: N½
Section 30: NW¼
Township 7 South, Range 97 West, 6th P.M.
Section 3: Tracts 71 and 72, Amended Tract 75, Lots 5 through 7, and SE¼ SE¼
Sections 3, 4 and 9: Tract 77F
Section 4: Tracts 77B, 77C, 79E, 79F, and 79G
Section 5: Lots 5 through 10, Tracts 84 and 85
Section 8: Lots 1 through 8, Tracts 85, 88 and 89
Section 9: Lots 1 and 2, Tracts 92, 93, 94A, 94B, 94C, 94D, 94E, 94F, and 95
Section 10: All
Section 11: S½ S½
Section 12: S½ S½
Section 13: All
Section 14: W½
Sections 15 and 16: All
Section 17: Lots 1 through 9, Tracts 103 and 111, and S½ SE¼
Section 18: Lots 5 through 10, Tracts 103 and 104, SE¼ SW¼ and SW¼ SE¼
Section 19: Lots 5 through 9, W½ NE¼ and E½ NW¼
Section 20: Lots 1 through 3, E½, E½ W½, and SW¼ SW¼
Section 21: Lots 3 and 4, Tract 112A (Echo #2), Tract 113 (Echo #3), Tract 114A, Tract 114B (Echo #1 claim), Tract 115A (Echo #4), and Tract 124A1 (Echo #6)
Section 22: All except Tract 112B
Sections 23 and 24: All
Section 25: N½
Section 26: N½
Section 27: Tract 120A (Texas #41), Tracts 121B and C (Ransom #6 claim), Tract 122 (Texas #30), Tracts 123A and B (Ransom #5 claim), and Tract 124A1 (Echo #6)
Section 28: Tract 124A1
9. On May 8, 2008, the Commission issued Order No. 510-41, which among other things, allowed the equivalent of one well per 10 acres to be drilled on the below-listed lands, for the production of gas and associated hydrocarbons from the Williams Fork Formation, with the permitted well to be located no closer than 100 feet from the outside boundary:
Township 6 South, Range 97 West, 6th P.M.
Section 19: E½ W½ NW¼
10. On February 9, 2009, Oxy, by its attorney, filed with the Commission a verified application for an order to allow the equivalent of one well per 10 acres to be drilled into and produced from the Williams Fork and Iles Formations, for the below-listed lands:
Township 5 South, Range 96 West, 6th P.M.
Section 31: SE¼ and Lots 1 and 2
Township 7 South, Range 97 West, 6th P.M.
Section 8: The E½ of Tract 39 and 1.26 acres out of the NW corner of Tract 39
Section 17: Tract 89
Section 18: Tracts 89 and 91
Section 21: Tracts 112B and 112C
Section 22: Tract 112B
Section 26: Tracts 121C and 121B
Further, in that same verified application, Oxy requests that the equivalent of one well per 10 acres to be drilled into and produced from the Iles Formation, for the below-listed lands:
Township 6 South, Range 97 West, 6th P.M.
Section 2: S½ and Lots 9, 10, 15, 16, 21, and 22
Section 3: Lots 7 through 16 and S½
Sections 4 and 5: All
Section 6: Lots 13 through 18, Lots 22 through 25, and E½ SW¼ and SE¼
Section 8: E½, E½ NW¼, SW¼ NW¼, and SW¼
Sections 9 and 10: All
Section 11: W½ and SE¼
Section 14: S½
Sections 15 through 17: All
Section 18: E½ and SE¼ NW¼
Section 19: NE¼, E½ NW¼ and E½ W½ NW¼
Sections 20 through 22: All
Section 23: NW¼
Section 28 and 29: All
Sections 32 through 34: All
Township 7 South, Range 96 West, 6th P.M.
Section 9: S½
Section 10: SW¼
Section 15: NW¼
Section 16: All
Section 17: NE¼ and S½
Section 18: S½
Section 19: N½ and SW ¼
Section 20: N½
Section 30: NW¼
Township 7 South, Range 97 West, 6th P.M.
Section 3: Tracts 71 and 72, Amended Tract 75, Lots 5 through 7, and SE¼ SE¼
Sections 3, 4 and 9: Tract 77F
Section 4: Tracts 77B, 77C, 79E, 79F, and 79G
Section 5: Lots 5 through 10, Tracts 84 and 85
Section 8: Lots 1 through 8, Tracts 85, 88 and 89
Section 9: Lots 1 and 2, Tracts 92, 93, 94A, 94B, 94C, 94D, 94E, 94F, and 95
Section 10: All
Section 11: S½ S½
Section 12: S½ S½
Section 13: All
Section 14: W½
Sections 15 and 16: All
Section 17: Lots 1 through 9, Tracts 103 and 111, and S½ SE¼
Section 18: Lots 5 through 10, Tracts 103 and 104, SE¼ SW¼ and SW¼ SE¼
Section 19: Lots 5 through 9, W½ NE¼ and E½ NW¼
Section 20: Lots 1 through 3, E½, E½ W½ and SW¼ SW¼
Section 21: Lots 3 and 4, Tract 112A (Echo #2), Tract 113 (Echo #3), Tract 114A, Tract 114B (Echo #1 claim), Tract 115A (Echo #4), and Tract 124A1 (Echo #6)
Section 22: All except Tract 112B
Sections 23 and 24: All
Section 25: N½
Section 26: N½
Section 27: Tract 120A (Texas #41), Tracts 121B and C (Ransom #6 claim), Tract 122 (Texas #30), Tracts 123A and B (Ransom #5 claim), and Tract 124A1 (Echo #6)
Section 28: Tract 124A1
The application further proposes
that all future wells drilled, for either the Williams Fork or Iles Formations,
or both, as the case may be, upon such lands should be located downhole anywhere
but no closer than 100 feet from the outside boundary of the application lands
unless such 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 10-acre density wells, in which event the Williams Fork and/or Iles
Formation wells to be drilled upon the application lands should be drilled
downhole no closer than 200 feet from that portion of the boundary which so
abuts or corners the lands in respect of which 10-acre density downhole drilling
for Williams Fork or Iles Formation wells has not been ordered by the
Commission.
Except as previously authorized by order of the Commission, wells to be drilled under this application should 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 Colorado Oil and Gas Conservation Commission pursuant to application made for such exception, and that both the Williams Fork and Iles Formations should be drilled from a single wellbore to limit drilling and promote economic gas recovery from both formations, such that separate wellbores should not be drilled to reach each formation, unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission.
11. On March 17, 2009, Oxy, 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.
12. Testimony and exhibits submitted in support of the application showed that Oxy is a leasehold owner for the application lands, and that Williams RMT Company, Marathon Oil Company, and Berry Petroleum Company, also leasehold owners for the application lands, have given their consents for the inclusion of their lands under this application. Additional testimony showed that lands adjacent to the application lands have been approved for 10-acre well density for the production of the Williams Fork and Iles Formations.
13. Testimony and exhibits submitted in support of the application indicates that the geological model for the Williams Fork and Iles Formations underlying the application lands is generally understood and widely productive. Additional testimony indicated that the most productive reservoirs in the Piceance Basin are found in the Upper Cretaceous Mesaverde, which includes the Williams Fork and Iles Formations, and that the Piceance Basin is a northwesterly trending, asymmetric basin which is approximately 90 miles long by 40 miles wide with the application lands being located along the western flank of the Piceance Basin in the Cascade Creek area, which is a northwestern extension of the Grand Valley Field. Additional testimony showed that the Iles Formation consists of an interbedded sequence of sands and shales that were deposited primarily in a marine to coastal plain environment with a gross interval thickness of 650 to 750 feet and is comprised of three conformable, stratigraphic units (the basal Corcoran Member, the middle Cozzette Member, and the upper Rollins Member.) Further testimony indicated that although gross sand packages within the Iles Formation appear to correlate between selected wells, individual pay zones are not continuous and, consequently, the pay zones are difficult to correlate between wells. Testimony showed that it is expected that the Iles Formation underlying the application lands has relatively low matrix permeability of less than 0.05 microdarcies with 6 to 10% effective porosity, and that these reservoirs must be artificially fractured to enhance their productive flow rates. Further testimony demonstrated that 10-acre well density is required to maximize the ultimate recovery of gas-in-place for the Iles Formation underlying the application lands.
15. The above-referenced testimony and exhibits showed that the proposed increase in 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.
16. Oxy USA WTP LP agreed to be bound by oral order of the Commission.
17. 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 to allow the equivalent of one well per 10 acres for certain lands in Townships 5 through 7 South, Ranges 96 through 97 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork or Iles Formations, with the permitted well to be located no closer than 100 feet from the boundary of the application lands.
ORDER
NOW, THEREFORE IT IS ORDERED, that the equivalent of one well per 10 acres is hereby approved for the below-listed lands, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:
Township 5 South, Range 96 West, 6th P.M.
Section 31: SE¼ and Lots 1 and 2
Township 7 South, Range 97 West, 6th P.M.
Section 8: The E½ of Tract 39 and 1.26 acres out of the NW corner of Tract 39
Section 17: Tract 89
Section 18: Tracts 89 and 91
Section 21: Tracts 112B and 112C
Section 22: Tract 112B
Section 26: Tracts 121C and 121B
IT IS FURTHER ORDERED, that the equivalent of one well per 10 acres is hereby approved for the below-listed lands, for the production of gas and associated hydrocarbons from the Iles Formation:
Township 6 South, Range 97 West, 6th P.M.
Section 2: S½ and Lots 9, 10, 15, 16, 21, and 22
Section 3: Lots 7 through 16 and S½
Sections 4 and 5: All
Section 6: Lots 13 through 18, Lots 22 through 25, and E½ SW¼ and SE¼
Section 8: E½, E½ NW¼, SW¼ NW¼, and SW¼
Sections 9 and 10: All
Section 11: W½ and SE¼
Section 14: S½
Sections 15 through 17: All
Section 18: E½ and SE¼ NW¼
Section 19: NE¼, E½ NW¼ and E½ W½ NW¼
Sections 20 through 22: All
Section 23: NW¼
Section 28 and 29: All
Sections 32 through 34: All
Township 7 South, Range 96 West, 6th P.M.
Section 9: S½
Section 10: SW¼
Section 15: NW¼
Section 16: All
Section 17: NE¼ and S½
Section 18: S½
Section 19: N½ and SW ¼
Section 20: N½
Section 30: NW¼
Township 7 South, Range 97 West, 6th P.M.
Section 3: Tracts 71 and 72, Amended Tract 75, Lots 5 through 7, and SE¼ SE¼
Sections 3, 4 and 9: Tract 77F
Section 4: Tracts 77B, 77C, 79E, 79F, and 79G
Section 5: Lots 5 through 10, Tracts 84 and 85
Section 8: Lots 1 through 8, Tracts 85, 88 and 89
Section 9: Lots 1 and 2, Tracts 92, 93, 94A, 94B, 94C, 94D, 94E, 94F, and 95
Section 10: All
Section 11: S½ S½
Section 12: S½ S½
Section 13: All
Section 14: W½
Sections 15 and 16: All
Section 17: Lots 1 through 9, Tracts 103 and 111, and S½ SE¼
Section 18: Lots 5 through 10, Tracts 103 and 104, SE¼ SW¼ and SW¼ SE¼
Section 19: Lots 5 through 9, W½ NE¼ and E½ NW¼
Section 20: Lots 1 through 3, E½, E½ W½ and SW¼ SW¼
Section 21: Lots 3 and 4, Tract 112A (Echo #2), Tract 113 (Echo #3), Tract 114A, Tract 114B (Echo #1 claim), Tract 115A (Echo #4), and Tract 124A1 (Echo #6)
Section 22: All except Tract 112B
Sections 23 and 24: All
Section 25: N½
Section 26: N½
Section 27: Tract 120A (Texas #41), Tracts 121B and C (Ransom #6 claim), Tract 122 (Texas #30), Tracts 123A and B (Ransom #5 claim), and Tract 124A1 (Echo #6)
Section 28: Tract 124A1
The application further proposes that all future wells drilled, for either the Williams Fork or Iles Formations, or both, as the case may be, upon such lands shall be located downhole anywhere but no closer than 100 feet from the outside boundary of the application lands unless such 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 10-acre density wells, in which event the Williams Fork and/or Iles Formation wells to be drilled upon the application lands shall be drilled downhole no closer than 200 feet from that portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork or Iles Formation wells has not been ordered by the Commission.
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 Colorado Oil and Gas Conservation Commission pursuant to application made for such exception, and that both the Williams Fork and Iles Formations shall be drilled from a single wellbore to limit drilling and promote economic gas recovery from both formations, such that separate wellbores shall not be drilled to reach each formation, 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 1st day of April, 2009, as of March 30, 2009.
CORRECTED this 15th day of April, 2009, as of March 30, 2009.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert A. Willis, Acting Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
April 15, 2009