L , E , PARSLEY, DAVIS & GOTTING A PROFESSIONAL ...
Transcript of L , E , PARSLEY, DAVIS & GOTTING A PROFESSIONAL ...
CELEBRATING OVER 50 YEARS OF SERVICE
LOOMIS, EWERT, PARSLEY, DAVIS & GOTTING A PROFESSIONAL CORPORATION
124 WEST ALLEGAN STREET - SUITE 700 LANSING, MICHIGAN 48933-1784
TELEPHONE: (517) 482-2400 FACSIMILE: (517) 853-8671 Email address: [email protected]
PLUMMER SNYDER (1900-1974)
JACK C. DAVIS, PC ELDONNA M. RUDDOCK KARL L. GOTTING, PC KEVIN J. RORAGEN GEORGE W. LOOMIS JAMES R. NEAL RICHARD W. PENNINGS (1918-2007) KENNETH W. BEALL THERESA A. SHEETS MICHAEL G. OLIVA TED S. ROZEBOOM HOWARD J. SOIFER CATHERINE A. JACOBS SARA L. CUNNINGHAM (1949-2003) MICHAEL H. RHODES TRACEY L. LACKMAN JEFFREY L. GREEN JAMES F. ANDERTON, V QUENTIN A. EWERT JEFFREY S. THEUER MICHAEL G. STEFANKO WILLIAM D. PARSLEY MICHAEL F. MATHESON OF COUNSEL
October 2, 2009 Ms. Mary Jo Kunkle Executive Secretary Michigan Public Service Commission 6545 Mercantile Way P. O. Box 30221 Lansing MI 48909
Re: O. I. L. Energy Corp. - MPSC No. U-16079 Dear Ms. Kunkle:
Enclosed for electronic filing is an Amended Application, which document is submitted on behalf of O. I. L. Energy Corp. Also enclosed is a Proof of Service.
If you have any questions or concerns, please feel free to contact me.
Very truly yours, James R. Neal JRN:mbh Enclosures pc/enc: Hon. Sharon L. Feldman Interested Parties O. I. L. Energy Corp. I:\JRN\O I L\MATTER 93 - BIG WOLF MPSC VACUUM APPLICATION\KUNKLE LTR 100209.doc
STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
In the matter of the application of O.I.L. Energy Corp. for an approval to operate all of the wells in the Big Wolf Antrim Unit in Montmorency and Oscoda Counties, Michigan under vacuum.
) ) ) Case No. U-16079 ) )
AMENDED APPLICATION
O.I.L. Energy Corp. (“OIL”) requests approval, as set forth herein, from the
Michigan Public Service Commission (“Commission”) under Rule 17 of the
Commission’s Rules for Production and Transmission of Natural Gas, R460.867 (“Rule
17”), and 1929 PA 9, MCL 483.101 et seq.; MSA 33.1311 et seq. (“Act 9”), to operate
under vacuum all of the wells in the Big Wolf Antrim Unit in Montmorency and Oscoda
Counties, Michigan.
In support of its Amended Application, OIL states as follows:
1. OIL is a Michigan corporation engaged in the business of exploring for and
producing oil and gas in the State of Michigan. Its offices are located at 954 Business
Park Drive, Suite 5, Traverse City, Michigan 49686. Among the wells that OIL operates
in the State of Michigan are all of the Antrim Shale wells located in the Big Wolf Antrim
Unit in Montmorency and Oscoda Counties, Michigan.
2. Rule 17 provides that “no gas well, pool or field” shall be placed under
vacuum by the use of compressors, pumps or other devices except with the approval of
the Commission.
3. On August 24, 2009, the following applications were filed with the
Commission to operate Antrim Gas projects on vacuum:
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Applicant Case No. HighMount Midwest Energy, LLC U-16074
Belden & Blake Corporation U-16075
Terra Energy Company, LLC U-16076
4. OIL filed its Application in this case on August 26, 2009. After further
investigation, study and analysis, it is OIL’s position in this Amended Application that
vacuum operations should not be approved by the Commission, because such
operations as proposed may cause waste, may impair correlative rights and likely will
not increase ultimate recovery. However, in order to protect its correlative rights and
the rights of its royalty owners, OIL filed its Application and this Amended Application so
that it may undertake vacuum operations promptly in the event the Commission
approves the commencement of vacuum operations by Highmount, Belden & Blake and
Terra.
5. This Amended Application is specifically filed to seek conditional
authorization from the Commission pursuant to Rule 17 to operate all of the wells in the
Big Wolf Antrim Unit under vacuum. The pre-condition is the Commission’s approval of
the Highmount, Belden & Blake and Terra applications. If, on the other hand, vacuum
operations are denied under those applications, OIL would withdraw this Application.
6. The Big Wolf Antrim Unit was established by Supervisor of Wells Order
No. (A) 3-3-03 dated April 24, 2003. The lands included in the USP and the lands
subject to this Application are described as follows:
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Section 1: Entire Section 2: E ½ and NW ¼ Section 11: SE ¼ of NE ¼, N ½ of SE ¼ Section 12: W ½ of NW ¼ Township 28 North, Range 1 East, Greenwood Township, Oscoda County, Michigan Section 25: Entire Section 26: E ½ Section 35: SE ¼ of SE ¼ Section 36: E ½, SW ¼, E ½ of NW ¼, SW ¼ of NW ¼ Township 29 North, Range 1 East, Albert Township, Montmorency County, Michigan. (“Big Wolf USP”)
The number of acres in the USP is approximately 2,920 acres. The Big Wolf Antrim Unit
has been operated as a USP, consistent with Supervisor of Wells Order No. (A) 3-3-03,
from April 24, 2003 to the present.
7. Supervisor of Wells Order No. (A) 14-9-94 reached the following
Conclusion of Law:
“4. I conclude, as a Matter of Law, an area developed under a Uniform Spacing Plan (USP) can be considered a “pool” pursuant to Act No. 61. “Pool” means an underground reservoir containing a common accumulation of oil or gas or both. MCL 319.2(d).”
By virtue of Supervisor of Wells Order No. (A) 3-3-03, because the Big Wolf USP, was
established by order of the Supervisor of Wells as a USP, it constitutes a “pool” for
purposes of Rule 17.
8. Attachment A is a map of the Big Wolf USP Area showing the locations of
all Antrim Formation gas wells, all lease access roads and all flow lines currently located
on the Big Wolf USP Area. A map of the area affected by the Application and the
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contiguous property is Attachment B. Attachment B shows well locations within 1320
feet of the area affected by the Application. Lease ownership, based on the holders of
drilling permits on contiguous quarter quarter sections, is as follows:
Antrim Drilling Permit No.
Permittee (Lease Holder)
51620 Muskegon Development 51619 Muskegon Development 51637 Muskegon Development 58547 O.I.L. Energy Corp. 54514 Muskegon Development 51628 Muskegon Development 51631 Muskegon Development 56391 J5 Inc. 50380 J5 Inc. 48403 Terra Energy Company LLC 48248 Terra Energy Company LLC
9. All of the drilling permits for Antrim Formation gas wells within the Big Wolf
USP Area are held by OIL. OIL remains the operator of the Big Wolf USP.
10. In the evidentiary hearing, Applicant will present evidence to support its
request for relief. The following is a brief description of the facilities and operational
procedures proposed by OIL, for operation of Antrim Shale gas wells on vacuum, if the
Commission decides to approve such operations in Case Nos. U-16074, U-16075, U-
16076 and in this case:
OIL intends to install compression at each wellhead in the Big Wolf USP project, or compression otherwise located within the project, so that all wells in the project can be operated on a vacuum. These compressors will discharge to the Big Wolf CPF via the existing flow line system. An oxygen detection system exists at the facility that will automatically shut down the facility should the oxygen concentration reach 95 ppm. The wells and associated compression will be checked daily and monitored for potential oxygen leaks.
At the hearing, OIL will describe its proposed operations.
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11. The only pre-conditions to vacuum operations OIL proposes are as
follows: (i) new facilities used for vacuum operations will comply with all rules of the
Commission; (ii) the operator will install facilities of sufficient strength and design
suitable for vacuum service; (iii) oxygen and vacuum pressure sensors will be installed,
to detect leakage of ambient air into a well or piping; and (iv) a shut down system will be
installed.
12. If the authority sought by Highmount, Belden & Blake and Terra is
granted, in an effort to protect correlative rights, the Commission is asked to authorize
any and all existing and future Antrim Formation gas wells drilled in the Big Wolf Antrim
Unit to be operated on vacuum without restrictions but subject to the pre-conditions set
forth in this Application. Additionally, OIL recommends that all producing Antrim
Formation gas wells, which offset the Big Wolf USP (on 80 or 40-acre Supervisor of
Wells approved drilling units or on Supervisor of Wells approved USP projects) should,
after the operator thereof has filed a proper Application with the Commission and after
notice and hearing and issuance of an order, be permitted to operate on vacuum
without restrictions other than the pre-conditions proposed in this Application. After the
Commission has entered an order approving vacuum operations for a well or all wells in
a unit, thereafter, all operators of offset wells should be entitled to receive sixty (60)
days advance written notice prior to the date on which vacuum operations are proposed
to begin.
13. As set forth in Paragraph 11 on Page 13 of Order No. (A) 3-3-03, all
mineral owners within the Big Wolf USP share in USP production on a net mineral acre
basis. Thus, whether one, several, or all of the wells in the USP are placed on vacuum,
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the owners within the USP will receive their fair and equitable shares of increased gas
production.
14. If the Commission establishes the criteria for vacuum operations in
Michigan, OIL requests that it be authorized to install vacuum facilities on one, several
or all of the wells in the USP Area, in a manner and on a schedule OIL deems
appropriate. The Antrim gas wells presently within the Big Wolf USP are described in
Attachment C.
15. Attachment D shows the locations of the vacuum associated surface
facilities, proposed to be operated pursuant to this request.
16. OIL requests the continuation of the 330 foot hardline around the outside
boundaries of an 80-acre drilling unit or a USP unit. The 330 foot hardline was
designed by the Supervisor of Wells to protect correlative rights and avoid waste.
17. The offset operators to the Big Wolf Antrim Unit are Muskegon
Development Company, J5 Inc., Terra Energy Company, LLC and OIL The offset
projects are located to the south, north and east. OIL proposes to give notice to those
Operators, as required by Rule 17, by service of the Commission’s Notice of Hearing
and publication in the Michigan Oil and Gas News.
18. OIL represents that the conditional grant of authority requested by this
Application is reasonable and in the public interest, and that the same is consistent with
the Commission’s charge under Act 9 to prevent waste and to conserve natural gas
resources.
Wherefore, OIL Energy Corp. respectfully requests that the Commission grant
approval under Rule R460.867 for vacuum operations of the “pool” consisting of the Big
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Wolf Antrim Unit, and all of the wells in the Big Wolf Antrim Unit, under vacuum, on
condition that the Commission enters an order granting approval of vacuum operations
in Case Nos. U-16074, U-16075 and U-16076.
O.I.L. Energy Corp.
Dated: October 2, 2009 By: _____________________________ James R. Neal (P24265) Attorney for O.I.L. Energy Corp. Loomis, Ewert, Parsley, Davis & Gotting, P.C. 124. W. Allegan St., Ste. 700 Lansing, MI 48933-1784 (517) 482-2400 [email protected]
I:\JRN\O I L\MATTER 93 - BIG WOLF MPSC VACUUM APPLICATION\AMENDED APPLICATION FOR U-16079.doc
INDEX OF ATTACHMENTS
Attachment Description
A
Map of Big Wolf USP
B Map of the area affected by this Application and the contiguous 40-acre ¼ ¼ sections
C Antrim gas wells in the pool
D Map showing proposed locations of vacuum facilities
I:\JRN\O I L\MATTER 93 - BIG WOLF MPSC VACUUM APPLICATION\INDEX OF ATTACHMENTS 100209.doc
STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
In the matter of the application of O. I. L. Energy Corp. for an approval to operate all of the wells in the Big Wolf Antrim Unit in Montmorency and Oscoda Counties, Michigan under vacuum.
) ) ) Case No. U-16079 )
PROOF OF SERVICE
STATE OF MICHIGAN ) ) SS COUNTY OF INGHAM ) Maurita Holcomb, being duly sworn, deposes and says that on October 2, 2009, she served a copy of the Amended Application of O. I. L. Corp. upon the attached service list by electronic mail. ___________________________ Maurita Holcomb Subscribed and sworn to before me me this 2nd day of October, 2009. _________________________________ Karen M. Culton, Notary Public, Ingham County, MI, Acting in Ingham County, MI. My commission expires: 07/28/12
SERVICE LIST
Hon. Sharon L. Feldman Administrative Law Judge Michigan Public Service Commission 6545 Mercantile Way - Ste. 14 P. O. Box 30221 Lansing, MI 48909 [email protected]
Bret A. Totoraitis Assistant Attorney General Michigan Public Service Commission 6545 Mercantile Way – Ste. 15 P. O. Box 30221 Lansing, MI 48909 [email protected]
Hon. Mark D. Eyster Administrative Law Judge Michigan Public Service Commission 6545 Mercantile Way - Ste. 14 P. O. Box 30221 Lansing, MI 48909 [email protected]
Spencer A. Sattler Assistant Attorney General Michigan Public Service Commission 6545 Mercantile Way – Ste. 15 P. O. Box 30221 Lansing, MI 48909 [email protected]
James A. Christopherson Dingeman, Dancer & Christopherson, PLC 100 Park St Traverse City, MI 49684 [email protected]
John H. Norris Dickinson & Wright, PLLC 38525 Woodward Ave. – Ste. 2000 Bloomfield Hills, MI 48304 [email protected]
Joel R. Myler Muskegon Development Company 31 E. Front St. Traverse City, MI 49684 [email protected]
I:\JRN\O I L\MATTER 93 - BIG WOLF MPSC VACUUM APPLICATION\AMENDED APPLICATION E-FILING\PROOF OF SERVICE.doc