S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * *

Transcription

1 S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * * In the matter of the application of ) UNION OIL COMPANY OF CALIFORNIA, d/b/a ) SPIRIT ENERGY 76, for increased allowable ) Case No. withdrawal orders for the State Garfield 2-8 ) and the State Garfield 8-9 natural gas wells. ) ) At the April 12, 1999 meeting of the Michigan Public Service Commission in Lansing, Michigan. PRESENT: Hon. John G. Strand, Chairman Hon. David A. Svanda, Commissioner ORDER APPROVING MAXIMUM ALLOWABLE NATURAL GAS WITHDRAWAL RATES On March 4, 1999, Union Oil Company of California, d/b/a Spirit Energy 76, (Spirit) filed an application seeking increased maximum allowable withdrawal orders for the State Garfield 2-8 and the State Garfield 8-9 wells pursuant to the provisions of 1929 PA 9, as amended, MCL et seq.; MSA et seq. Specifically, Spirit requested that the Commission issue an order approving maximum daily allowable withdrawals of 4.0 million cubic feet per day (MMcf/day) from the State Garfield 2-8 Well and 9.5 MMcf/day from the State Garfield 8-9 Well. Spirit s application states that (1) the State Garfield 2-8 and State Garfield 8-9 wells are two of five wells producing gas from the Prairie du Chien (PdC) formation in the Garfield Field, (2) that there is common ownership of royalty interests in the field, (3) that the working interest owners are

2 identical for all PdC gas wells in the field, and (4) that PdC gas production from the field is unitized by voluntary arrangement. Spirit also states that a skin effect characteristic of both wells is obstructing the flow of gas between the reservoir and well bore, causing a reduction in the calculated absolute open flow (CAOF) of gas from each well. Spirit asserts that, under the circumstances, both wells can be produced at withdrawal rates higher than the existing regulatory limitations, thus improving economic performance without causing damage to the wells or the reservoir. Attached to the application are technical and production data supporting Spirit s position, including calculations of the CAOF for each well with and without the skin effect, and the wells respective daily flow histories. The Commission Staff (Staff) has reviewed the application, supporting data, and production history of the wells. Based on its review, the Staff concluded that the allowable production rates proposed for the State Garfield 2-8 and State Garfield 8-9 wells can efficiently produce gas at the average rate of 4.0 MMcf/day and 9.5 MMcf/day, respectively, without damage to the wells or the reservoir. After reviewing the application and supporting data, the Commission finds that good cause exists for approving Spirit s request and that ex parte approval is appropriate. The Commission FINDS that: a. Jurisdiction is pursuant to 1909 PA 300, as amended, MCL et seq.; MSA et seq.; 1929 PA 9, as amended, MCL et seq.; MSA et seq.; 1919 PA 419, as amended, MCL et seq.; MSA 22.1 et seq.; 1939 PA 3, as amended, MCL et seq.; MSA 22.13(1) et seq.; 1969 PA 306, as amended, MCL et seq.; MSA 3.560(101) et seq.; Page 2

3 and the Commission's Rules of Practice and Procedure, as amended, 1992 AACS, R et seq. b. The State Garfield 2-8 Well, located in the Garfield PdC Field, should be allowed to produce gas at the maximum rate of 4.0 MMcf/day. c. The State Garfield 8-9 Well, located in the Garfield PdC Field, should be allowed to produce gas at the maximum rate of 9.5 MMcf/day. d. The common ownership of interests and voluntary unitization in the affected field make it unnecessary to require a proration order. e. The public interest will be adequately protected without the time and expense of a public hearing. THEREFORE, IT IS ORDERED that: A. The maximum allowable withdrawal rate for natural gas from the State Garfield 2-8 Well shall be 4.0 million cubic feet per day. B. The maximum allowable withdrawal rate for natural gas from the State Garfield 8-9 Well shall be 9.5 million cubic feet per day. C. The Commission Staff shall issue permanent allowable withdrawal orders in accordance with this order. The Commission reserves jurisdiction and may issue further orders as necessary. Page 3

4 Any party desiring to appeal this order must do so in the appropriate court within 30 days after issuance and notice of this order, pursuant to MCL ; MSA MICHIGAN PUBLIC SERVICE COMMISSION ( S E A L ) /s/ John G. Strand Chairman /s/ David A. Svanda Commissioner By its action of April 12, /s/ Dorothy Wideman Its Executive Secretary Page 4

5 Any party desiring to appeal this order must do so in the appropriate court within 30 days after issuance and notice of this order, pursuant to MCL ; MSA MICHIGAN PUBLIC SERVICE COMMISSION Chairman By its action of April 12, Commissioner Its Executive Secretary Page 5

6 In the matter of the application of ) UNION OIL COMPANY OF CALIFORNIA, d/b/a ) SPIRIT ENERGY 76, for increased allowable ) Case No. withdrawal orders for the State Garfield 2-8 ) and the State Garfield 8-9 natural gas wells. ) ) Suggested Minute: Adopt and issue order dated April 12, 1999 granting Union Oil Company of California, d/b/a Spirit Energy 76, increased allowable withdrawal orders for the State Garfield 2-8 and the State Garfield 8-9 natural gas wells, as set forth in the order.