BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION ) CAUSE NO. 513
AND ESTABLISHMENT OF FIELD RULES TO )
GOVERN OPERATIONS IN THE KOKOPELLI ) ORDER NO. 513-4
FIELD, GARFIELD COUNTY, COLORADO )
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 8:00 a.m. on July 15, 2008, in Ballroom B of the Brown Palace Hotel, 321 Seventeenth Street, Denver, Colorado, for an order to allow the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the lease line or outside boundary for certain lands in Township 6 South, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation and les Formations.
FINDINGS
The Commission finds as follows:
1. Orion Energy Partners, L.P. (“Orion”), 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. Certain lands in Sections 4, 7, 9, 12, 13, 16, 18, 21, 27 and 28, Township 6 South, Range 91 West, 6th P.M. are subject to this Rule for the Williams Fork and Iles Formations.
5. On December 19, 1994, corrected February 17, 1995, the Commission issued Order No. 513-1, which among other things, established 320-acre drilling and spacing units for Sections 8 and 17, Township 6 South, Range 91 West, 6th P.M., for production from the Williams Fork Formation.
6. On December 2, 1999, the Commission issued Order No. 513-2, which among other things allowed up to eight wells to be drilled on the established 320-acre drilling and spacing units for Sections 8 and 17, Township 6 South, Range 91 West, 6th P.M., for production of gas and associated hydrocarbons from the Williams Fork Formation, with the permitted well to be located 600 feet from the boundary of the drilling and spacing unit, and no closer than 1200 feet from another well drilling to or producing from the Williams Fork Formation.
7. On February 12, 2007, the Commission issued Order No. 513-3, which among other things, allowed wells to be optionally drilled into and produced from the Williams Fork and Iles Formations for certain lands in Township 6 South, Range 91 West, 6th P.M., the equivalent of one Williams Fork Formation and Iles Formation well per 20 acres, with each well located no closer than 200 feet from the boundaries of a lease line or from the unit.
8. On May 23, 2008, Orion, by its attorney, filed with the Commission a verified application for an order to allow the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the lease line or outside boundary for the below-listed lands for production from the Williams Fork and Iles Formations:
Township 6 South, Range 91 West, 6th P.M.
Section 4: Lots 8, 9, 12, SW¼ SE¼
Section 7: S½ SE¼, SE¼ SW¼
Section 8: S½, E½ NE¼
Section 9: W½
Section 12: S½ SE¼
Section 13: W½ E½, E½ SW¼
Sections 16 and 17: All
Section 18: Lot 4, SE¼ NW¼, E½ SW¼, E½
Section 21: SE¼ NW¼, SW¼ NE¼, NE¼ SW¼, NW¼ SE¼, E½ SE¼
Section 27: NW¼ NW¼
Section 28: NE¼ NE¼
All wells drilled upon the application lands 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 Colorado Oil and Gas Conservation Commission, and that both formations will be reached from a single wellbore.
9. On June 30, 2008, Orion, by its attorney, filed with the Commission an amendment to the application deleting the SE¼ SE¼ of Section 4, Township 6 South, Range 91 West, 6th P.M.
10. On July 2, 2008, Orion, 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.
11. Testimony and exhibits submitted in support of the application showed that Orion is the leasehold owner for Williams Fork and Iles Formations on the application lands. Additional testimony showed that lands adjoining the application lands have been approved for 10-acre well density.
12. Testimony and exhibits submitted in support of the application showed that the Williams Fork and Iles Formations are member of the Mesaverde Group and are common sources of supply, but due to the heterogeneity of the formations and the frequency of different sand body widths, increased density is necessary to efficiently and economically recover the reserves while protecting correlative rights.
13. Testimony and exhibits submitted in support of the application showed the original gas-in-place for 10-acre density on the application lands is approximately 2.1 BCF, with an anticipated estimated recovery factor of 0.76% yielding an estimated ultimate recovery of 1.6 BCF. While a stand alone Iles Formation well would not be drilled, it is an engineering and economically viable formation when developed in conjunction with the Williams Fork Formation. Additional testimony showed that one well per 10 acres will recover incremental reserves, preventing waste, while having no adverse affect on correlative rights.
14. 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.
15. Orion Energy Partners, L.P. agreed to be bound by oral order of the Commission.
16. Based on the facts stated in the verified amended 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, with the permitted well to be located no closer than 100 feet from the lease line or outside boundary for certain lands in Township 6 South, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
ORDER
NOW, THEREFORE IT IS ORDERED, that the equivalent of one well per 10 acres is hereby approved for the below-listed lands for production from the Williams Fork and Iles Formations, with the permitted well to be located no closer than 100 feet from the lease line or outside boundary:
Township 6 South, Range 91 West, 6th P.M.
Section 4: Lots 8, 9, 12, SW¼ SE¼
Section 7: S½ SE¼, SE¼ SW¼
Section 8: S½, E½ NE¼
Section 9: W½
Section 12: S½ SE¼
Section 13: W½ E½, E½ SW¼
Sections 16 and 17: All
Section 18: Lot 4, SE¼ NW¼, E½ SW¼, E½
Section 21: SE¼ NW¼, SW¼ NE¼, NE¼ SW¼, NW¼ SE¼, E½ SE¼
Section 27: NW¼ NW¼
Section 28: NE¼ NE¼
IT IS FURTHER ORDERED, that all wells drilled upon the application lands 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, and that both formations will be reached from a single wellbore.
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 July, 2008, as of July 15, 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
July 21, 2008