History of Coalbed Methane Gas Well Spacing

Initially, the Ignacio Gas Field and the Blanco Gas Field were considered separate pools, under Colorado Oil and Gas Conservation Commission (COGCC) Cause 3 and Cause 45, respectively. Order No. 3-12 (October 11, 1955) pooled the Ignacio Field Fruitland Formation (coalbeds and sandstones) with the Pictured Cliffs sandstone and specified a density of one gas well per 320 acres. Blanco Field rules were established under Spacing Order No. 45-1 (October 11, 1954) and mainly pertained to the Mesaverde Formation. Cause 112 combined the Ignacio and Blanco Fields into one Ignacio-Blanco gas field. Spacing Order No. 112-6 (November 9, 1959) established the Ignacio-Blanco field boundaries and reasserted 320-acre spacing for Mesaverde and Pictured Cliffs/Fruitland pools. Order No. 112-46 (July 16, 1979) allowed a second infill well per 320-acre spacing unit for the respective Fruitland/Pictured Cliffs and Mesa Verde pools. COGCC Spacing Order No. 112-60 (June 15, 1988) separated out the Fruitland coalbeds as a distinct pool and reverted to 320-acre spacing, citing Order No. 112-6. State Spacing Order No. 112-61 (August 15, 1988) amended Order No. 112-60 by establishing additional field rules, but maintained Fruitland coalgas well spacing at 320 acres. Nearly 1000 coalbed methane wells (including new CBM wells and conventional gas wells plugged back and recompleted in the Fruitland coalbeds) were drilled in Colorado by 1999 under Spacing Order No. 112-61.

Beginning in 1992, several operators of coalbed methane wells applied for Spacing Order amendments. The COGCC approved these applications to drill one additional production well per 320-acre spacing unit in explicitly specified areas. This served as a test of reservoir simulation studies that suggested 160-acre spacing was optimal in certain areas for overall reservoir performance, economics and accelerated recovery of additional reserves that might otherwise be left in place. The first proposal was submitted by Emerald Gas Operating Company for four new wells and the recompletion of two conventional gas wells located on the Southern Ute Indian Reservation in the Valencia Canyon Area. Operators, the COGCC and some members of the general public were averse to the proposal on the grounds that correlative rights would be affected, current spacing was adequate, and approval would set a precedent for Basin-wide down-spacing. The Southern Ute Indian Tribe and the BLM supported the proposal as a pilot project. Since Tribal minerals and surface were involved, the BLM had jurisdiction and approved this infill drilling application. Subsequently, four new CBM wells were drilled and two conventional wells were recompleted as coalbed methane wells in late 1992. Several infill-drilling applications (including Red Willow Production Company - 93 additional wells; Vastar Resources, Inc. - 30 wells; Mark West Energy Partners, Ltd. – 11 wells; J.M Huber Corporation - 22 wells; Amoco – 23 wells, and lesser numbers by other operators) were submitted and approved in amending Orders of the Colorado Oil and Gas Conservation Commission. By the end of 1998, approximately 60 infill locations had been drilled and completed. If reservoir models and simulations continue to project that optimum recovery, economics and performance are best accomplished in some areas by 160-acre infill drilling, more wells may be drilled.