BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA

Transcription

1 - - ;~:~ 6 BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA APPLICANT: MARJO OPERATING CO., INC. ) ) RELIEF SOUGHT : DRILLING AND SPACING UNITS ) CAUSE CD NO. ) T LAND COVERED : SECTION 20, TOWNSHIP 15 NORTH, ) RANGE 3 EAST, LINCOLN COUNTY, ) ORDER NO. OKLAHOMA ) ORDER OF THE COMMISSIO N This cause came on for hearing on November 18, 2008, at 8 :30 a.m. before Curtis Johnson, Administrative Law Judge for the Oklahoma Corporation Commission, in the Commission's Courtroom, 440 S. Houston, Tulsa, Oklahoma, pursuant to notice given as required by law and by the rules of the Commission, for the purpose of hearing, taking testimony and reporting his findings and recommendations to the Commission. J. Fred Gist, Attorney, appeared for the Applicant, Marjo Operating Co., Inc. ; and Sally Shipley, Deputy General Counsel for Conservation, filed notice of appearance for the Commission. The Administrative Law Judge heard the cause and filed his report with the Commission, which report has been considered and the Commission therefore finds and orders as follows : FINDINGS 1. That this is an application of Marjo Operating Co., Inc. for an order creating proper drilling and spacing units for certain common sources of supply underlying the lands described in the caption hereof. Amendments: At the time of the hearing, the Applicant requested, and was permitted, to amend its Application by interlineations in order to request that the Commission establish 640-acre units for the Marmaton and Mississippian common sources of supply as reservoir dewatering projects. The Application was further amended to dismiss the Cleveland and Prue common sources of supply. 2. The Commission has jurisdiction of the subject matter herein and of the persons interested therein and has jurisdiction to enter this Order hereinafter set forth. Notice of the filing of the application herein and of the time, date and place of the hearing thereon was duly and properly given in all respects as required by law and the rules of the Commission. The Administrative Law Judge has examined the notices by publication, the publishers' affidavits of publication thereof, and the affidavits of mailing and the Administrative Law Judge conducted a judicial inquiry into the sufficiency of Applicant's search to determine the names and whereabouts of the Respondents who were served by publication and based upon the evidence adduced, the Commission finds that Applicant has exercised due diligence and has conducted a meaningful search of reasonably available sources at hand. The Commission hereby approves the publication service given herein as meeting the statutory requirements, rules of the Commission and minimum standards of the state and federal due process, and finds that notice has been given in all respects as required by law and the rules of the Commission. 3. Applicant alleges that the land described in the caption hereof overlies the actual or prospective common sources of supply named below; that Applicant owns oil and gas interests in the area covered by this Application which entitle Applicant to drill for and produce oil and gas from the land covered by the Application; that the protection of correlative rights and prevention of waste require that proper drilling and spacing units and well location be established as follows : : :30360

2 MARJO OPERATING CO., INC. CAUSE CD NO T SPAC ING ORDE R PAGE 2 COMMON SOURCES UNIT SIZE/ DEPTH EXTEN D OF SUPPLY CLASSIFICATION ORDER/INITIAL Marmaton 640-acre/Oil, Dewatering 4,109' Initial Mississippian 640-acre/Oil, Dewatering 4,670' " Each of said 640-acre units to be comprised of governmental Section 20, Township 15 North, Range 3 East, Lincoln County, Oklahoma, with the permitted unit well to be located not closer than 1,320 feet to the outer boundaries of said governmental section. 4. The lands described in the caption hereof are underlain by said common sources of supply listed in Paragraph 3 above, and the Commission should establish the 640-acre drilling and spacing units, comprised of said governmental section, for said sources of supply underlying the lands covered by this Application. The Applicant presented substantial evidence in the form of exhibits and testimony by an expert petroleum geologist. He stated that there is an existing well in the NE/4 of said Section 20 called the Sonny Day # 1-20 Well. Said well was completed in the Hunton common source of supply, but the Applicant believes there are potentially productive formations behind pipe in said wellbore. Specifically, the Mississippian and Marmaton appear to be productive, although both formations have high water saturation. A study of the logs, structure maps, isopach maps, production histories and other well information shows that the Marmaton and Mississippian in this area are both suitable for development as an oil dewatering project. Wells in the area, particularly said Sonny Day # 1-20 Well, have provided log data showing that the formations contain considerable amounts of water. The logs on said well show the Marmaton to have to have 53% water saturation. The logs on said well also show the Mississippian to have various intervals with each computing to greater than 50% water saturation. Wells in the area produce considerable amounts of oil and water. The applicant believes that commercial production can be established by completing said Sonny Day # 1-10 Well in the Marmaton and Mississippian formations and utilizing appropriate water handling facilities. One well will be able to recover economically, as a reservoir dewatering project, the reserves in the Marmaton and Mississippian underlying an area of approximately 640 acres. Therefore, the Commission should establish, as initial spacing, the units requested by the Applicant. 5. Due to high water saturations in excess of 50% in the Marmaton and Mississippian sources of supply underlying this area, Applicant intends to develop the each of said sources of supply as a reservoir dewatering project. Therefore, Applicant asserts that, in accordance with Title 52, Section 87.1 (d) O.S., the Commission should establish a 640-acre drilling and spacing unit as a reservoir dewatering project for said Marmaton and Mississippian sources of supply underlying the lands described in the caption hereof. 6. That from the evidence, it appears that the common sources of supply named in Paragraph 3 above will underlie all of the lands described in said paragraph; that one well will adequately, economically, and efficiently drain at least an area of the size of the drilling and spacing unit as set out in Paragraph 3, that the size of each drilling and spacing unit set out in said paragraph is the minimum which should be established for the common sources of supply named in said Paragraph That to prevent, or assist in preventing, the various types of waste prohibited by statute, or any of said wastes, or to protect or assist in protecting the correlative rights of interested parties, the Commission should establish the drilling and spacing units as set out under "Order" below : :30360

3 MARJO OPERATING CO., CAUSE CD NO T SPACING ORDER PAGE 3 ORDER IT IS THEREFORE ORDERED by the Corporation Commission of the State o f Oklahoma as follows : That the following drilling and spacing units and unit well locations are established as follows : COMMON SOURCES OF SUPPLY UNIT SIZE/ I DEPTH CLASSIFICATION EXTEND ORDER/INITiAi, Marmaton 109 ' Initial «Each of said 640-acre units to be comprised of governmental Section 20, Township 15 North, Range 3 East, Lincoln County, Oklahoma, with the permitted unit well to be located not closer than 1,320 feet to the outer boundaries of said governmental section. 2. In accordance with Title 52, Section 87.1 (d) O.S., the Commission hereby establishes said 640-acre drilling and spacing units as a reservoir dewatering oil units for said sources of supply underlying the lands described in the caption hereof. 3. That all royalty interests within each drilling and spacing unit are pooled and unitized and each royalty owner shall share in all production from any well thereon in the proportion that the acreage owned by each such royalty owner bears to the entire acreage in the particular drilling and spacing unit. 4. That when there are two or more separately owned tracts or undivided interests separately owned within each drilling and spacing unit established hereby, the owners thereof may validly pool their interests and develop the drilling and spacing unit as a unit ; that where, however, such owners have not agreed to so pool their interests and to develop each drilling and spacing unit as a unit, their rights and equities shall be pooled and adjudicated as provided in sub-section e, 87.1, Title 52, Oklahoma Statutes. 5. That no more than one well shall hereafter be produced from the common sources of supply named above on each drilling and spacing unit established hereby, and the permitted well on each drilling and spacing unit established hereby shall be drilled only at the location thereon as prescribed above, unless the Commission, prior to the drilling of said well, shall have authorized a well location exception therefor in accordance with 87.1, Title 52, Oklahoma Statutes. 6. This Order shall alter the well spacing rules and requirements previously applicable to the common sources of supply underlying the drilling and spacing unit established by this order by superseding the provisions of OCC-OGR 165 : General Well Spacing Requirements, to the extent such provisions are inconsistent with this Order. The allowable for a well in the reservoir dewatering oil spacing units created hereby shall be set in accordance with OCC-OAC 165 : (h) : :

4 MARJO OPERATING CO., INC. CAUSE CD NO T SPACING ORDER PAGE 4 7. That attached hereto and made a part hereof as Exhibit "A", is a plat depicting the drilling and spacing unit established by this order and the permitted well locations therefor. ON OF OKLAHOMA man ~~. _, ANTH ROTH, Commissioner DONE AND PERFORMED this ~ day of ' ER OF THE C OMMISSION : PEGGY HELI;, Secretar y REP(IRT OF THE ADMINISTRATIVE LAW JUDGE The above and foregoing findings and order are the report and recommendations of the Administrative Law Judge. Administrative Law e Date Reviewer Order approved as to f `Z1 glo Date J. FreA gist, Attorney for Applicant : : 30360

5 EXHIBIT "A" , APPLICANT : MARJO OPERATING CO., INC. CAUSE CD NO. : T LAND COVERED : SECTION 20, TOWNSHIP 15 NORTH, RANGE 3 EAST, LINCOLN COUNTY, OKLAHOMA UNITS CREATED: 640-acre drilling and spacing oil/dewatering units for the Marmaton and Mississippian common sources of supply underlying said lands, with permitted wells located not closer tha n 1,320 feet to the outer boundaries of the section : :30360