Saint Barnabas RC Church - Decision and Order, June 24, 1994
Decision and Order, June 24, 1994
STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
In the Matter of the Application of SAINT
BARNABAS R.C. CHURCH for a variance from the well
spacing provisions of 6 NYCRR 553.1 and establishment
and unitization of a spacing unit for its Fee No. 2
natural gas well, to be located on church property
in the Town of Cheektowaga, Erie County.
DECISION AND ORDER
(DEC Project No. DMN 94-1)
- Pursuant to a Notice of Hearing dated April 22, 1994, a public hearing was held before Administrative Law Judge ("ALJ") Edward Buhrmaster on June 2, 1994, at the St. Barnabas School, 2099 George Urban Blvd., Depew, New York; and
- Upon review of the attached hearing report of ALJ Buhrmaster, I concur with its recommendations;
NOW, THEREFORE, having found that the granting of a variance from the statewide spacing provisions of 6 NYCRR 553.1 and the integration of interests in the proposed spacing unit surrounding the proposed Fee No. 2 well on the property of St. Barnabas R.C. Church, 2049 George Urban Blvd., Depew, New York, is necessary to carry out the policy provisions of Environmental Conservation Law ("ECL") Section 23-0301, it is hereby ordered that:
- A spacing unit is hereby established in the Medina Group consisting of 48.4 acres surrounding the St. Barnabas Fee No. 2 well in the Town of Cheektowaga, Erie County, as shown in the map received by the ALJ as Hearing Exhibit No. 12. A copy of this map, certified by a licensed surveyor, shall be provided to the Department's Division of Mineral Resources prior to issuance of any drilling permit.
- With the exception of the Fee No. 2 well, no oil or gas well shall be drilled within the 48.4-acre spacing unit. All production realized from the Fee No. 2 well shall be for the exclusive use of St. Barnabas R.C. Church, and no mineral interest revenue shall be generated.
- All operations, including the operations of the well, on any portion of the spacing unit covered by this Order shall be deemed for all purposes the conduct of such operations upon each separately owned tract in the spacing unit by the owner or several owners thereof. That portion of the production allocated to each tract included in the spacing unit covered by this order shall, when produced, be deemed for all purposes to have been produced from such tract by a well drilled thereon.
- Unless voluntary integration of interests is accomplished pursuant to the provisions of ECL Section 23-0701 within a period of 90 days from the date of this Order, compulsory integration of interests within the spacing unit pursuant to the provisions of ECL Section 23-0901(3) shall become effective 91 days from the date of this Order.
- For purposes of this Order, the 7.97-acre Dick Urban Plaza tract (representing the one unsigned landowner within the 48.4-acre unit) shall be force pooled and made part of the Fee No. 2 spacing unit. Entry upon the unleased Dick Urban Plaza property by Saint Barnabas R.C. Church is prohibited.
- The unitized landowners shall receive no compensation from St. Barnabas R.C. Church for their mineral rights. The integrated interests in the spacing unit shall pertain only to production realized from the Medina interval.
- Saint Barnabas R.C. Church is installed as the unit operator and shall bear all costs of drilling, operating and producing from the well.
- As unit operator, Saint Barnabas R.C. Church shall file a copy of this Order with the Erie County Clerk and shall submit proof of such filing to the Department's Division of Mineral Resources within 30 days of the effective date of this Order.
IN WITNESS WHEREOF: The Department of
Environmental Conservation has caused
this Order to be signed and issued and
has filed the same with all the maps, plans,
reports, and other papers relating
thereto in its office in the County of
Albany, New York, this 24th day
of June, 1994.
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
LANGDON MARSH, ACTING COMMISSIONER
TO: Arlene Lotters
NYSDEC Division of Legal Affairs
50 Wolf Road
Albany, New York 12233-5500
c/o St. Barnabas R.C. Church
2049 George Urban Blvd.
Depew, New York 14043
Brayton P. Foster
4279 Lower Covert Road
Trumansburg, New York 14886
STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
50 Wolf Road
Albany, New York 12233-1550
In the Matter of the Application
- of -
SAINT BARNABAS R.C. CHURCH for a variance from the well spacing
provisions of 6 NYCRR 553.1 and establishment and unitization of a
spacing unit for its Fee No. 2 natural gas well, to be located on
church property in the Town of Cheektowaga, Erie County
DEC Project No. DMN 94-1
- by -
Administrative Law Judge
Background and Brief Project Description
Pursuant to a notice dated April 22, 1994, a public hearing was held before Administrative Law Judge ("ALJ") Edward Buhrmaster on June 2, 1994, at the St. Barnabas School, 2099 George Urban Blvd.,Depew, New York.
The hearing concerned a proposal by the Applicant, Saint Barnabas R.C. Church, 2049 George Urban Blvd., Depew, to drill one natural gas well on church property near the corner of Dick Road and George Urban Boulevard in the Town of Cheektowaga, Erie County. The well, to be called the St. Barnabas Fee No. 2 well, would be 953 feet from an existing natural gas well (St. Barnabas Fee No. 1) which is now operated by the church.
As part of its proposal, the Applicant requests a variance from the well spacing provisions of 6 NYCRR 553.1. Section 553.1 provides that a well drilled for the production of gas cannot be located less than 660 feet from any boundary line of the lease, integrated leases or unit, and cannot be less than 1,320 feet from any other well in the same pool.
There are seven parcels not controlled by the Applicant more than 500 feet but less than 660 feet from the proposed well site. Also, the proposed well site is less than 1,320 feet from the existing St. Barnabas Fee No. 1 well.
In addition to a variance, the Applicant requests the establishment and, if necessary, the compulsory integration and unitization of a spacing unit in the Medina Group surrounding the proposed No. 2 well. This unit was proposed in the hearing notice to be 53.01 acres in size. At the hearing the proposed unit was reduced to 48.4 acres by agreement of the Applicant and Department of Environmental Conservation (DEC) Staff.
DEC as lead agency determined that the granting of the requested variance and issuance of a compulsory integration and unitization order was an unlisted action and would not have a significant effect on the environment. This determination was made pursuant to Environmental Conservation Law ("ECL") Article 8 and 6 NYCRR 617.
As announced in the notice, the hearing began with a legislative session to receive comments on the variance request and proposed spacing unit. The notice was published in the Department's Environmental Notice Bulletin on April 27, 1994, and in the Depew Bee on May 5, 1994. Also, copies of the notice were sent to appropriate state, county and local officials, and to others who had expressed an interest in the project or who might be affected by it.
There were no requests to speak at the legislative hearing session. Only one letter was received in response to the notice. That letter, from Sun Company, Inc., confirmed a prior agreement that company had with the Applicant to acquire Sun's natural gas rights.
Immediately following the legislative session an issues conference was held (1) to determine party status for any person who had properly filed to participate at an adjudicatory hearing, and (2) to narrow and define the scope of issues, if any, which would require adjudication.
Filing requirements and deadlines were contained within the notice of hearing. No filings were received and no one appeared at the hearing to request party status.
The only participants at the issues conference were the Applicant and DEC Staff.
The Applicant was represented by Brayton P. Foster, a consulting geologist whose address is 4279 Lower Covert Road, Trumansburg, New York, 14886.
DEC Staff was represented by Arlene Lotters of DEC's Division of Legal Affairs, Room 608, 50 Wolf Road, Albany, New York, 12233.
Prior to the hearing DEC Staff had composed a draft permit which it is prepared to issue should the variance and spacing unit issues be resolved successfully. The Applicant said at the hearing it had reviewed the draft permit conditions and accepted them.
As noted above, the Applicant requires a variance from the well spacing provisions of 6 NYCRR 553.1. Section 553.4 provides that where there exists good and sufficient reason to permit an exception to these provisions, DEC may permit reasonable well location exceptions which will protect correlative rights and prevent waste. Exceptions may be granted based on written applications, which are then subject to a mandated public hearing.
In this case DEC Staff said it supported granting the requested variances. In support of its recommendation, Staff noted the following considerations:
- The Applicant has attempted in good faith to obtain leases from neighboring landowners to satisfy the 660-foot setback provision.
- The Applicant has secured gas rights to 83.6 percent of the acreage within the 31.42 acres defined by a 660-foot circle drawn around the proposed well.
- Previous drilling operations in the area of the proposed well have proven the Medina Group to be capable of producing natural gas, but with average to below average recovery.
- No public comments against granting the variance have been received by DEC.
No formal adjudication of the variance request is required since the Applicant has made the required filing and DEC Staff, the only other party in this hearing, supports variance issuance.
After the hearing notice was issued the Applicant suggested to DEC Staff a spacing unit smaller than the 53.01 acres originally proposed. This new spacing unit is 48.4 acres in size. It has been created by deleting several properties from the original unit. It contains no properties that were not part of that unit.
At the hearing DEC Staff said it supported issuance of an order integrating interests in the 48.4 acre unit. Staff said its calculations supported the conclusion of Mr. Foster, the Applicant's consulting geologist, that the proposed Fee No. 2 well would drain less acreage than the originally proposed 53.01-acre unit.
DEC regulation provides for the promulgation of orders establishing well spacing to promote effective development, use, or conservation of oil and gas resources. Prior to promulgation of any spacing order, a public hearing must be held by DEC acting either on its own motion or upon receipt of an application therefor from any interested owner or operator [6 NYCRR 553.3(a),(b)].
No formal adjudication of the spacing order is required since the Applicant and DEC Staff, as the only two hearing parties, have agreed on its terms. The actual language of the order was negotiated by the parties during discussions at the hearing which were moderated by the ALJ. Before the hearing ended, the ALJ read the proposed language onto the hearing record and the parties then indicated their agreement.
As to the integration of interests within the proposed spacing unit, DEC Staff said it had considered three alternatives:
- A one-time lump sum payment of $500 to the Dick Urban Plaza, the one remaining unsigned landowner, in satisfaction of partial royalty interests in the proposed well;
- A one-time lump sum payment to all mineral interest owners, both signed and unsigned, in total satisfaction of their royalty interest in the well; and
- No payment either to signed or unsigned landowners.
DEC Staff said it chose the third alternative in consideration of the efforts made by the Applicant to secure gas rights, the modest amount of projected gas recovery, and the opportunity that had been provided for affected owners to participate in this hearing.
- The spacing variance needed for the St. Barnabas Fee No. 2 well should be granted.
- The attached draft order establishing the proposed 48.4-acre spacing unit should be executed.
- This matter should be remanded to DEC Staff for issuance of a well drilling permit consistent with the one Staff presented at this hearing.