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Glodes Corners Road Field - Ruling, October 28, 1999

Ruling After Public Hearing - Apx. B - October 28, 1999

Appendix B

Glodes Corners Road Field Hearings

Summary of Non-Staff Testimony and Post Hearing Submissions

  1. Mitchel Kozak (Tr. p. 28) complained of the developer's timing of payments and treatment of timber on his land.
  2. David Lachance for the Bureau of Land Management (BLM), U.S. Department of the Interior (Tr. p. 31, Exhibit 10(G))noted that this action will affect lands which are owned by the United States and administered by the U.S. Fish and Wildlife Service. BLM does not disagree the State's draft proposal, but wanted it noted that the U.S. is not bound by states' determinations in such matters, that concurrence with the State's proposal here should not be construed as consent to a lease of U.S. property, and that a determination on same is pending. A copy of the deed to the parcel in question is included in Exhibit 10(G).
  3. James Fox on behalf of himself and Stasia Fox (Tr. p. 36; Exhibit 11(G); see Well No. 623217 on Exhibit 5(G)) indicated that adjacent to his parcel is a 45 acre parcel on the west side of Gay Road, the mineral rights to which were obtained by an employee of the developer. Mr. Fox noted that his unit is 196 acres while the neighboring units are each 165 acres. Mr. Fox contended that the unit he is in should be shifted eastward to not extend west of Gay Road, and should exclude the 45 acre parcel mentioned. Mr. Fox noted that he owns 69.86 acres, not 67.6 acres shown on the map. He also noted that the well on his property had been on-line for 38 weeks, but that he had yet to receive word when royalty payments (estimated at $18,000 plus interest) would be made. Mr. and Mrs. Fox recommended that the Department publish a guide for landowners who would lease oil and gas rights to developers, and require the posting of a One Million Dollar Bond for each property to be drilled upon to ensure restoration of all damages.
  4. David Covert (Tr. p. 42, Exhibit 12(G)), disputed that the reservoir drains as implied in the proposed action because he has had a lease with the developer since 1987, but wells drilled on neighboring properties proved dry or "useless." See wells 622302, 623220, 623221 on Exhibit 5(G). Noting that his lease contains a "no pooling" provision, he contended that the proposed action would take his property from him (i.e., royalties from a resource he believes to be only on his property will become shared with neighbors within the spacing unit). In Exhibit 12(G), the Addendum to the lease contains a provision which states: "6. Lesee hereby agrees that these leased premises shall be unitized only with Lessor's written consent."
  5. Vincent Bedient (Tr. p. 49) owns property within a few hundred feet of the spacing unit occupied by the Bergstresser well (623268) which unit Mr. Bedient described as being 400 feet by one mile in dimension. Mr. Bedient's property is not included in any spacing unit. Mr. Bedient said that he had been told he had 81 acres within the spacing unit. He believes that he should be sharing in the revenue from the well. (On Exhibit 5(G), his property appears closer to the well than portions of the spacing unit.)
  6. Tracy Gingrich on behalf of the U.S. Fish and Wildlife Service (Tr. p. 51) testified that the Service would not grant the developer occupancy to surface lands of the McDougall tract for oil and gas development purposes because of the environmentally fragile wetlands on same.
  7. Christopher Spence on behalf of Erwin and Alice Spence (Tr. p. 53, Post-Hearing Exhibit 16(G)) pointed out that the Spences own land closer to the Bergstresser well than anyone else other than the Bergstressers, but they have not been included in the unit. Mr. Spence indicated that had the northern boundary of several units been continued in a straight line, the Spences' property would have been included in a unit. He contended that the units had been "gerrymandered" to give people advantage.

    In their (Post-Hearing) Affidavit, Erwin and Alice M. Spence gave detailed information concerning their property location and dimensions, and reiterated the presentation made at the hearing by their representative, essentially protesting their exclusion from the production unit while other property owners, a mile away, are included. They found it incredible that the pool would terminate so close to their property while the well is also located nearby, and argued that if the 7,000 foot deep Bergstresser well is angled just a few degrees from the perpendicular, the bottom of the shaft would be under their land. They alleged that the developer asked them to sign a lease forfeiting any right to participate in the Bergstresser well and promising to seek royalties only from a yet-to-be drilled well on property owned by Calkins (further from the Spenses' property than the Bergstresser well), which well would not be allowed under the proposed rules.

  8. Jeffrey Squires, Esq., on behalf of David and Mina Covert (Tr. p. 59, see Speaker 5 above, Exhibit 12(G)) contended that gas is being drawn from under his clients' property, and that the spacing unit should be as it has been paid to the clients.
  9. Belden and Blake Corporation, through David Whedbee and the letter of Carl J. Carlson, District General Manager (Tr. p. 61, Exhibit 9),contended that the outcome of the spacing hearings for both the Glodes Corners Road and Muck Farm Fields would have a direct impact on the exploration and development of its nearby leases for production from Cambrian and Ordovician formations. With reference to the signed and draft stipulations for both fields (Exhibits 4(M), 6(G), 7(G)), the company contends there are four issues which could be detrimental to both operators and royalty owners.
    1. Minimum spacing for drilling extension and other non-infill wells: Belden and Blake contends that requiring any extension or other infill well to be 5280 feet from an existing well would impede field development and result in leaving recoverable reserves undeveloped. As an alternative, Belden and Blake suggests minimum spacing in the direction of the general structural strike of the geologic feature of the greater of 5,000 feet from the center of the nearest established spacing unit, or 2,000 feet from the edge of the nearest established spacing unit; and in the direction perpendicular to the general structural strike, a minimum distance of the greater of 2,000 feet from the center of the nearest established spacing unit or 660 feet from the edge of the nearest spacing unit.
    2. Shape of spacing units and location of initial well within spacing units: Belden and Blake point out that the existing wells within the three easternmost units are not centrally located within each unit. This is not objectionable because it provides flexibility in further development of the geologic structure through in-fill drilling. However, there is concern that this might not be permitted in the future because it violates one of the criteria stated for forming future spacing units.
    3. Size of spacing units: Belden and Blake contends that there should be no distinction between the "non-infill" and "extension" classes of wells and that the minimum spacing unit size for each should be 150 acres. It is contended that geologic data does not exist to support a minimum unit size of 320 acres for the Much Farm Field
    4. Overlap of area covered by proposed spacing orders: Belden and Blake are concerned that because the Glodes Corners Road and Muck Farm Fields are near each other, wells drilled at particular locations may qualify as "Extension Wells" for both fields and be subject to their conflicting requirements.
  10. Robert Curry, on behalf of himself and other members of the Curry Family (Tr. p. 97, Exhibit (13(G)), testified that they agreed with the D.E.C. position that they should receive royalties. They also requested that any royalties be provided from the date of start of well production. Exhibit 13 (G) contains a map outlining the boundary of the Curry Family's holdings, which include lands in the units occupied by wells 623220 and 622302 as shown on Exhibit 5(G).
  11. Kevin Cronk (Tr. p. 98; Post-Hearing Exhibit 19(G)) noted that he owns 62 acres adjacent to the Covert Well No. 1 (see Exhibit 5(G), the unit containing the number "233. 34a" for the location). He testified that he had been approached twice by the developer about leasing his farm. The first time the developer indicated the gas from under Mr. Cronk's property would be taken through the Covert Well No. 1. The second time he was told he would not be included in the unit with Covert No. 1, but that if Mr. Covert did not sign a lease he would receive nothing. This upset Mr. Cronk. Mr. Cronk noted that his property is 62 acres in size, and wanted the map corrected to reflect same. Mr. Cronk submitted a plan of land to show the exact dimensions of the property.
  12. Kathleen and Duane Bergstresser (Post-Hearing Exhibit 14(G)) explained that well 623268 (see unit in the upper right corner of Exhibit 5(G)) was located in the western portion of the unit because they did not want the well located in their vineyard (near the center of the unit) and because of the 660 ft. spacing requirement from unleased property nearby. They submitted a sworn statement, a copy of their lease, and a marked-up map showing property and sounding locations.
  13. James R. Pizura (Post-Hearing Exhibit 15(G)) noted he is the surface owner of Well No. 623143. Noting the "sharp Southerly turn this unit takes," Mr. Pizura asked for a determination of whether an adjustment to the unit's shape was in order. He further noted that the Bergstresser and Radigan wells (623268, 623237) in the eastern part of the field maintain higher identical pressures while the remaining wells have lower similar pressures. To Mr. Pizura, this indicated that the Bergstresser and Radigan wells are not common to the wells to the west (i.e., the Pizura well) and that testing of the three wells should be performed before unit spacing in the area is determined. Mr. Pizura indicated that he was not aware of any testing of the theory that there is a "Limestone Wall" preventing hydrocarbon communication between northern and southern regions of the formation, which theory Mr. Pizura believes was determinative of the unit shapes. Mr. Pizurra also noted the location of the Bergstresser well within its unit and indicated his opinion that the unit should be shifted westward.
  14. Richard W. Beardsley, Vice President, Geology & Geophysics, Columbia Natural Resources, Inc.(Post-Hearing Exhibit 17(G)) reported that there are now 13 wells operating in the Glodes Corners Road Field, listed their names and identification numbers, and indicated that Columbia's draft stipulation (Exhibit 7(G)) should be revised to reflect this fact.

    He indicated that Department Staff and Columbia, based on a concerted analysis of extensive data, have come to common conclusions on all matters relating to the spacing and compulsory integration of the Glodes Corners Road Field except insofar as to issues concerning the payment of royalties from the existing wells in the Glodes Corners Road Field during the pendency of the instant action. Mr. Beardsley stated that the testimony of Mr. Kronk regarding the size and shape of his parcel was accurate, and is reflected on the map that is part of Exhibit 17(G), intended to correct Exhibit 5(G). He presented the following geological information:

    "The Glodes Corners Road Field is a seismically defined gas field in the Ordovician Black River Dolomite. The northern and southern extent of the field are delimited by high angle normal faults with up to 130 feet of throw. The area between the faults are nonregional secondary dolomite in the Black River having the configuration of a structural graben. The graben is offset by a tear fault on the east side of the field between the Bergstresser, Radigan and Pizura wells with the northwest southeast tear intersecting the Egressi well and physically separating the reservoir. The faulted limit of the reservoir to the north and south are respectively 660' south of the north unit lines and 660' north of the south unit lines. The eastern and western extent of the field is not well defined. Seismic definition is excellent over the proposed spacing units. Regional limestone provides a trapping mechanism to the north of the bounding fault on the reservoir. The cap on the reservoir is the entire Trenton Carbonate group. Secondary vugular and fracture porosity create the reservoir and the hydrocarbons present have an indigenous source in the Black River Carbonates. The reservoir appears to have a water leg at 5850 - 5900 feet subsea."

    Mr. Beardsley indicated that Columbia still supported the draft stipulations even after considering Belden and Blake's comments, and opined that the Department and Columbia proposed Stipulations for the Glodes Corners Road Field represent their best effort to promote the efficient and economic development of future wells in the field.

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