Source: http://cogcc.state.co.us/orders/orders/407/244.html
Timestamp: 2019-02-22 14:23:35
Document Index: 689608148

Matched Legal Cases: ['§34', '§34', '§34', '§34', '§34', '§34', '§34', '§34', '§34', '§34', '§34', '§34', '§34', '§34', '§34', '§34', '§34', '§34']

1410-UP-289 Catamount Draft Order.docx
IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE FRUITLAND COAL SEAMS, IGNACIO BLANCO FIELD, LA PLATA COUNTY, COLORADO
DOCKET NO. 1410-UP-289
ORDER NO. 112-244
The Commission heard this matter on October 27, 2014 at the Durango Public Library, 1900 E. 3rd Avenue, Durango, CO 81301, upon application for an order to pool all interests within an approximate 320-acre drilling and spacing unit established for the N½ of Section 18U, Township 34 North, Range 6 West, N.M.P.M. (S.U.L.), and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S. for the Lynch 34-6-18 #1 Well, for the development and operation of the Fruitland Coal Seams.
1. Catamount Energy Partners LLC (“Catamount” or “Applicant”) is an interested party in the subject matter of the above-referenced hearing.
4. On June 17, 1988, the Commission entered Order No. 112-60 which established that the Fruitland coal seams were a separate source of supply and that drilling and spacing units of 320-acres shall be established for the production of methane gas from these coal seams. Section 18U, Township 34 North, Range 6 West, N.M.P.M. (S.U.L.) is subject to this Order for the Fruitland Coal Seams.
5. On December 17, 1990, the Commission entered Order No. 112-85 which approved two field rules for all wells producing from the Dakota, Mesaverde, Fruitland Pictured Cliffs, and Fruitland Coal Formations to further protect the health, safety, and welfare of the citizens in the area. Section 18U, Township 34 North, Range 6 West, N.M.P.M. (S.U.L.) is subject to this Order for the Fruitland Coal Seams.
6. On December 9, 2008, the Commission entered Order No. 112-215 which approved four optional wells in approximate 320-acre drilling and spacing units in the Application Lands, for the production of oil, gas, and associated hydrocarbons from the Fruitland Coal Seams. The Order also required that the approved wells comply with the Memorandum of Understanding between BP America Production Company and La Plata County. Section 18U, Township 34 North, Range 6 West, N.M.P.M. (S.U.L.) is subject to this Order for the Fruitland Coal Seams.
7. On August 28, 2014, Catamount, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S. for an order to pool all interests in an approximate 320-acre drilling and spacing unit established for the below-described lands (“Application Lands”), for the development and operation of the Fruitland Coal Seams, and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., effective as of the earlier of the date of the Application, or the date that any of the costs specified in §34-60-116(7)(b), C.R.S., were first incurred for the drilling of the Lynch 34-6-18 #1 Well (API No. Pending) (“Well”):
Township 34 North, Range 6 West, N.M.P.M. (South of Ute Line)
Section 18U: Lots 1, 2, E½ NW¼ , NE¼ aka N½
8. On October 10, 2014, BP American Production Corporation (“BP” or “Protestant”) filed a Protest alleging that Catamount failed to sufficiently plan its operations to ensure that the proposed wells can be marketed without unnecessary cost or waste and that it failed to provide BO with sufficient information to make an informed decision on whether to elect to participate as required by §34-60-102, §34-60-103, §34-60-107, and §34-60-116 and Commission Rule 530.
9. On October 20, 2014, a prehearing conference was held with the parties. The parties presented their arguments on the record.
10. On October 21, 2014 (amended October 23, 2014), a Prehearing Order was issued by the Hearing Officer dismissing the Protest and converting it to a Rule 510 statement.
11. The parties agree that BP was provided an offer to lease or participate for its unleased mineral interest in a 42.49025 net mineral acre tract in the Well on October 13 and that BP’s election period expires on November 12, 2014.
12. On October 21, 2014, Catamount, by its attorneys, 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.
13. Land testimony and exhibits submitted in support of the Application by Jarred Rush, Landmen for Catamount, showed that all nonconsenting interest owners were notified of the Application and received an Authority for Expenditure ("AFE") and offer to participate in the Well. Further testimony concluded that the AFE sent by the Applicant to the interest owners was a fair and reasonable estimate of the costs of the proposed drilling operation and was received at least 30 days prior to the October 27, 2014 hearing date.
14. Land testimony showed the Applicant complied with the requirements of Rule 530, and is entitled to the cost recovery provisions pursuant to §34-60-116(7), C.R.S., for the Lynch 34-6-18 #1 Well, but did not provide testimony for any subsequent wells.
16. Catamount 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 Unit review of the Application under Rule 511., the Commission should enter an order to pool all interests in an approximate 320-acre drilling and spacing unit established for Section 18U, Township 34 North, Range 6 West, N.M.P.M. (S.U.L.), for the development and operation of the Fruitland Coal Seams, and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., effective as of the earlier of the date of the Application, or the date that any of the costs specified in §34-60-116(7)(b), C.R.S., were first incurred for the drilling of the Lynch 34-6-18 #1 Well.
1. Pursuant to the provisions of §34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act, all interests in the approximate 320-acre drilling and spacing unit established for the below-described lands, are hereby pooled, for the development and operation of the Fruitland Coal Seams, effective as of the earlier of the date of the Application, or the date that any of the costs specified in §34-60-116(7)(b), C.R.S., were first incurred for the drilling of Lynch 34-6-18 #1 Well (API No. Pending):
3. The nonconsenting (unleased) owners must reimburse the consenting working interest owners for their share of the costs and risks of drilling and operating the Well (including penalties as provided by §34-60-116(7)(b), C.R.S.) out of production from the drilling and spacing unit representing the cost-bearing interests of the nonconsenting working interest owners as provided by §34-60-116(7)(a), C.R.S.
4. Any unleased owners are hereby deemed to have elected not to participate and shall therefore be deemed to be nonconsenting as to the Well and be subject to the penalties as provided for by §34-60-116(7), C.R.S. Any party seeking the cost recovery provisions of §34-60-116(7), C.R.S., shall first comply with subsection (d) for any subsequent well(s).
8. For the purpose of its unleased mineral interest in a 42.49025 net mineral acre tract, BP will have up to and including November 12, 2014, within which to advise Catamount in writing if it intends to participate in the Well. Should BP fail to advise Catamount in writing of its intention to participate in the Well by November 12, 2014, or elects not to participate in the Well in writing before November 12, 2014, BP will be deemed to be nonconsenting as to the Well and be subject to the penalties as provided for by §34-60-116(7), C.R.S.
ENTERED this 19th day of November, 2014, as of October 27, 2014.