BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 1

 

DOCKET NO. 170300129

 

TYPE: GENERAL ADMINISTRATIVE

 

ORDER No. 1-200

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on July 24, 2017, at the at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to grant a Rule 502.b. variance and modify certain requirements of Order Nos. 535-30, 535-302, 535-376, 535-435, 535-451, 535-480, 535-485 and 535-635, to remove the requirement of an annual review of established unconventional resource units.

 

FINDINGS

 

The Commission finds as follows:

 

1.            Noble Energy, Inc. (Operator No. 100322) (“Noble” or “Applicant”), as applicant herein, is an interested party in the subject matter of the above‑referenced hearing.

 

2.            Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

 

3.            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.

 

4.            Under Rule 502.b.(1), the Commission may grant a variance to a rule, regulation or order by the Commission after hearing upon application.  The Applicant requesting the variance shall make a showing that it has made a good faith effort to comply, or is unable to comply with the specific requirements contained in these rules to secure a waiver or exception, if any, and that the requested variance will not violate the basic intent of the Oil and Gas Conservation Act.

 

5.            On December 12, 2016, Applicant presented its annual report on the unconventional resource units. After the presentation and upon request by the Applicant, the Commission stated that Applicant could proceed with filing an application for a Rule 502.b.(1) variance to seek an exemption from the annual reporting requirements for its unconventional resource units established in Colorado. 

 

6.            On March 25, 2013, the Commission entered Order No. 535-300 which, among other things, established an approximate 640-acre unconventional resource unit for Section 15, Township 9 North, Range 58 West, 6th P.M., and approved an appropriate number of wells to effectively and efficiently drain the reservoir, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director.

 

7.            On March 25, 2013, the Commission entered Order No. 535-302 which, among other things, established an approximate 3,200-acre unconventional resource unit for Sections 3, 4, 9, 10 and 16, Township 9 North, Range 58 West, 6th P.M., and approved an appropriate number of wells to effectively and efficiently drain the reservoir, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director.

 

8.            On July 29, 2013, the Commission entered Order No. 535-376 which, among other things, established an approximate 1920-acre unconventional resource unit for Sections 20, 28 and 29, Township 9 North, Range 59 West, 6th P.M., and approved an appropriate number of wells in order to effectively and efficiently recover the oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director.

 

9.            On October 28, 2013, the Commission entered Order No. 535-435 which, among other things, pooled all interests in an approximate 3,200-acre unconventional resource unit established for Sections 3, 4, 9, 10 and 16, Township 9 North, Range 58 West, 6th P.M., for the development and operation of the Codell-Niobrara Formation, effective as of the earlier of the date of the Application, or the date that any of the costs specified in §34-60-116(7)(b)(II), C.R.S., are first incurred for drilling each of the three Initial Wells.

 

10.          On December 16, 2013, the Commission entered Order No. 535-451 which, among other things, established an approximate 3,200-acre unconventional resource unit for Sections 1, 2, 11 and 12, Township 9 North, Range 58 West and Section 36, Township 10 North, Range 58 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, and approved an appropriate number of vertical, directional or horizontal wells in order to efficiently and economically recover the oil, gas and associated hydrocarbons from the proposed unit, with the productive interval of the wellbore to be located no closer than 300 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.

 

11.          On April 28, 2014, the Commission entered Order No. 535-480 which, among other things, established an approximate 3,200-acre unconventional resource unit for Sections 25, 26, 27, 34 and 35, Township 9 North, Range 59 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, and approve an appropriate number of vertical, directional or horizontal wells in order to efficiently and economically recover the oil, gas and associated hydrocarbons from the proposed unit, with the productive interval of the wellbore to be located no closer than 300 feet from the unit boundaries, except the eastern section boundary of Section 25 and the southern section boundary of Section 35 which shall remain at 600 feet, 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.

 

12.          On April 28, 2014, the Commission entered Order No. 535-485 which, among other things, pooled all interests within an approximate 1,920-acre unconventional resource unit established for Sections 20, 28 and 29, Township 9 North, Range 59 West, 6th P.M., and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S. for any well drilled within two years from the date of this Order, for the development and operation of the Codell and Niobrara Formations.

 

13.          On March 2, 2015, the Commission entered Order No. 535-635 which, among other things, pooled all interests within an approximate 3200-acre Unconventional Resource Unit established for Sections 25, 26, 27, 34, and 35, Township 9 North, Range 59 West, 6th P.M., and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S. for the Wells, for any well drilled within two years from the date of this Order, for the development and operation of the Codell and Niobrara Formations.

 

14.          On January 19, 2017, Noble, by its attorneys, filed an application for an order to approve a Rule 502.b.(1) variance to annual Commission reporting or review requirements set forth in Order Nos. 535-30, 535-302, 535-376, 535-435, 535-451, 535-480, 535-485 and 535-635 in certain lands in Townships 9 and 10 North, Ranges 58 and 59 West, 6th P.M.

 

15.          On May 1, 2017, Noble, by its attorneys, completed an annual review before the Commission of its unconventional resource units in Order Nos. 535-300, 535-376, 535-485 and 535-685.

 

16.          On July 24, 2017, the Commission heard arguments from counsel for Noble regarding whether the Commission should grant a variance in Order Nos. 535-30, 535-302, 535-376, 535-435, 535-451, 535-480, 535-485 and 535-635.  The Commission did not hear testimony regarding this matter.

 

17.          The Application and materials provided in support of the Application show that the unconventional resource units in Order Nos. 535-376, 535-485 and 535-685 are developed and that granting the Application will foster the mission of the Commission and the there was a good faith effort to comply, and that the requested variance will not violate the basic intent of the Colorado Oil and Gas Conservation Act, §§ 34-60-101, et seq., C.R.S.  However, in the units in Order No. 535-300 are not fully developed and there is approximately 25% of the unit that has not been drilled.  Noble has no current plans to develop the unit.

 

18.          Noble stated that if it intends to recomplete or further develop the unconventional resource units, Noble agrees that the requirement for an annual review will be reinstated.

 

19.          The Commission heard the evidence and deliberated on the issues set forth in the Application and presented by Counsel. 

 


 

ORDER

 

NOW, THEREFORE, IT IS ORDERED, after deliberations by the Commissioners:

 

1.            A Rule 502.b. variance is hereby granted in part and the requirement of an annual review in Order Nos. 535-302, 535-376, 535-435, 535-451, 535-480, 535-485 and 535-635 is hereby waived.

 

2.            The Commission finds that the unconventional resource unit in Order No. 535-300 is not fully developed and denies the request for a variance.  Noble shall continue to present its annual review for the approximate 640-acre unconventional resource unit.

 

3.            If Noble intends to re-enter any of the Application Lands for future development, the requirement for an annual review shall be reinstated for the respective unconventional resource unit for Order Nos. 535-302, 535-376, 535-435, 535-451, 535-480, 535-485 and 535-635.

 

IT IS FURTHER ORDERED:

 

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 23rd day of August, 2017, effective as of July 24, 2017.

 

                                                            OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

 

 

By: ____________________________________     

James Rouse, Acting Secretary