BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF BONANZA CREEK ENERGY OPERATING COMPANY – OPERATOR NO. 8960 – FOR AN ORDER TO REVOKE EDGE ENERGY, LLC’S APPROVED FORM 2 APPLICATION FOR PERMIT TO DRILL FOR THE FLAHERTY 18-7-10NBH WELL (API NO. 05-123-42435) FROM THE FLAHERTY 18-I PAD (FACILITY ID: 443962) LOCATED IN SECTION 18, TOWNSHIP 4 NORTH, RANGE 62 WEST, 6TH P.M., WELD COUNTY, COLORADO AND TO ISSUE A CEASE AND DESIST ORDER PURSUANT TO RULE 522.g BASED ON VIOLATIONS OF THE COLORADO OIL AND GAS CONSERVATION ACT, C.R.S. 34-60-107 AND C.R.S. 34-60-116(5). |
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CAUSE NO. 1
DOCKET NO. 160700304
TYPE: GENERAL ADMINISTRATIVE
ORDER NO. 1-197
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REPORT OF THE COMMISSION
The Commission heard this matter on July 19, 2016, at the Glenwood Springs Community Center, Sopris Rooms A & B, 100 Wulfsohn Road, Glenwood Springs, Colorado, upon application for an order to revoke an Application for Permit to Drill, Form 2 (“APD”), for the Flaherty 18-7-10NBH Well (API No. 05-123-42435) (the “Flaherty Well”) issued to Edge Energy, LLC., and allow the Commission or Director to issue an immediate cease and desist order against Edge Energy, LLC prohibiting any drilling activities on the Flaherty Well.
FINDINGS
1. Bonanza Creek Energy Operating Company, LLC (Operator No. 8960) (“Bonanza Creek”) is an interested party in the subject matter of the above-referenced hearing.
2. Edge Energy, LLC (Operator No. 10518) (“Edge”) is an interested party in the subject matter of the above-referenced hearing.
3. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.
4. The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.
5. On October 27, 2014, the Commission approved Order No. 407-1126 establishing an approximate 640-acre drilling and spacing unit for Section 18, Township 4 North, Range 62 West, 6th P.M., and allowing up to five (5) horizontal wells within the 640-acre drilling and spacing unit for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of the wellbore will be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director.
6. On April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Section 7, Township 4 North, Range 62 West, 6th P.M., is subject to this Rule for the Niobrara Formation.
7. Rule 503.b. (10) provides as follows:
b. Applications to the Commission may be filed by the following applicants:
(10) For purposes of seeking relief or a ruling from the Commission on any other matter not described in (1) through (9) above, only persons who can demonstrate that they are directly and adversely affected or aggrieved by the conduct of oil and gas operations or an order of the Commission and that their interest is entitled to legal protection under the Act may be an applicant.
8. On October 6, 2015, Edge Energy filed an APD, for the Flaherty Well. The APD for the Flaherty Well shows that the surface location will be on the Flaherty 18-I Pad in the NW¼SW¼ of Section 18, Township 4 North, Range 62 West, 6th P.M. The Flaherty Well will be drilled in a designated horizontal wellbore spacing unit as a horizontal well that will enter the Niobrara Formation 460 feet from the south boundary and 2262 feet from the west boundary of Section 7, Township 4 North, Range 62 West, 6th P.M. The APD was approved on or about November 14, 2015.
9. On May 19, 2016, Bonanza Creek, by its attorneys, filed a verified application (“Application”) pursuant to Commission Rule 503.b(10) for an order to: 1) revoke the APD issued to Edge for the drilling of the Flaherty Well on the grounds that the issuance of such APD is in violation of Sections 34-60-107, 34-60-116(5), and 34-60-117, C.R.S.; and 2) allow the Commission or Director to issue an immediate cease and desist order against Edge Energy, prohibiting any drilling activities on the Flaherty Well.
10. On May 24, 2016, Edge filed its Motion to Dismiss, Protest, and Objection to Request for a Cease and Desist Order (“Motion to Dismiss”). The Motion to Dismiss also requested an award of attorney’s fees and costs in favor of Edge.
11. On June 13, 2016, Bonanza Creek filed its Response to Edge Energy, LLC’s Motion to Dismiss, Protest, and Objection to Request for a Cease and Desist Order.
12. On June 24, 2016, Edge Energy filed its Reply in Support of Motion to Dismiss, Protest, and Objection to Request for a Cease and Desist Order.
13. On July 8, 2016, the Hearing Officer entered his Order Dismissing Application (“Order”). For the reasons set forth in the said Order, the Application was dismissed with prejudice and Edge’s request for attorneys’ fees and costs was denied.
14. The Order further provided that if a party disagreed with the Order and desired argument before the Commission, that party must so notify the Hearing Officer in a one page pleading to be filed on or before July 12, 2016, in which event, each party would have 15 minutes, exclusive of Commissioner questions, to present oral argument to the Commission at its July 18-20, 2016 hearing.
15. Neither Bonanza nor Edge sought argument before the Commission. Neither party appealed the Order to the Commission.
16. The Order was therefore placed on the consent agenda for approval at the July 19, 2016 Commission hearing and was approved and adopted by vote of the Commission.
CONCLUSIONS OF LAW
IT IS HEREBY ORDERED that the Application is hereby dismissed for the reasons set forth in the Hearing Officer’s July 8, 2016 Order Dismissing Application, which is approved and adopted as an order of the Commission.
ORDER
1. The provisions contained in the above order shall become effective immediately.
2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above Orders.
3. Under the State Administrative Procedure Act, the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.
4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.
ENTERED this 26th day of July, 2016, as of July 19, 2016.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Julie Murphy, Secretary