Piceance Spacing Order Protects Mineral Rights, COGCC Says

Dec 11, 2018

The Piceance Basin in Western Colorado and Eastern Utah is the second most productive natural gas deposit in the nation. In November, the Colorado Oil and Gas Conservation Commission (COGCC) imposed a new rule, called the Piceance Basin Spacing Order. It essentially creates protective bubbles around mineral rights.

When an operator drills in the Piceance, it can be within 100 feet of someone else’s minerals to the north or south, but now needs to be at least 600 feet away to the east and west.

The COGCC’s new rule draws ovals, or ellipses, around mineral rights in the Piceance, because, generally speaking, rocks there crack east-to-west.

When an oil and gas operator drills down to a gas deposit, it shoots several million gallons of water at very high pressures -- in the neighborhood of 10,000 pounds-per-square inch -- into the rock, breaking it. The cracks are only the thickness of a hair, but wide enough for the gas to escape.

Because the rock cracks east-to-west, the worry is operators, knowingly or unknowingly, will crack into minerals that aren’t theirs. According to Stuart Ellsworth, the engineering manager at the COGCC, the new setback rule is also to prevent operators from placing their wells to compete with their neighbors, not to extract minerals as efficiently as possible.  

“‘Hey, he’s stealing my hydrocarbons, so to protect myself, I’m going to put a well right next to his,’” Ellsworth said, speaking of the operators.  

The COGCC is supposed to make sure companies don’t drill more than they need to, so spacing the wells out prevents unnecessary drilling.

Ellsworth says some companies claim to like the new structure, which, they say, can save them money because they know development needs to happen within these new parameters.

Others, he said, don’t like it, because it means changing strategy and operations, both of which cost money.