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 IN THE WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NOS. 232 and 407

 

ORDER NOS. 232-275 and 407-434

 

 

REPORT OF COMMISSION

 

This cause came on for hearing before the Commission on June 27, 2011, Elbert County Fairgrounds, Ag Building, 95 Ute Avenue, Kiowa, Colorado, for an order to approve a variance from Rule 318A.f. to authorize a total of up to nine producing completions for the SE¼ of Section 36, Township 1 North, Range 68 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell, Niobrara, or “J” Sand Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.     Kerr-McGee Oil & Gas Onshore LP (“Kerr-McGee” 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.     On October 19, 1981, the Commission issued Order No. 232-23, which among other things, established 320-acre drilling and spacing units for certain lands, including Section 36, Township 1 North, Range 68 West, 6th P.M., and approved of up to two wells within each unit, for the production of gas and associated hydrocarbons from the “J” Sand Formation.

 

5.     On December 19, 1983, the Commission issued Order No. 407-1 (amended on March 29, 2000), which among other things, established 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons for the Codell Formation underlying certain lands, including the SE¼ of Section 36, Township 1 North, Range 68 West, 6th P.M., with the unit to be designated by the operator upon drilling the first well in the quarter section. The permitted well shall be located in the center of either 40-acre tract within the unit with a tolerance of 200 feet in any direction. The operator shall have the option to drill an additional well on the undrilled 40-acre tract in each 80-acre drilling and spacing unit.

 

6.     On February 19, 1992, the Commission issued Order No. 407-87 (amended August 20, 1993), which among other things, established 80-acre drilling and spacing units for the production of oil and/or gas from the Niobrara Formation underlying certain lands, including the SE¼ of Section 36, Township 1 North, Range 68 West, 6th P.M., with the permitted well locations in accordance with the provisions of Order No. 407-1.

 

7.     On April 27, 1998, the Commission adopted Rule 318A., which among other things, allowed certain drilling locations to be utilized to drill or twin a well, deepen a well or recomplete a well and to commingle any or all of the Cretaceous Age Formations from the base of the Dakota Formation to the surface.  On December 5, 2005, Rule 318A. was amended to, among other things, allow interior infill and boundary wells to be drilled and wellbore spacing units to be established.  The SE¼ of Section 36, Township 1 North, Range 68 West, 6th P.M. was included in this Rule.  Rule 318A.f. provides that there shall be no more than eight producing completions in the Codell, Niobrara or “J” Sand  Formations in any 160-acre governmental quarter section.

 

8.     On March 17, 2011, Kerr-McGee, by its attorneys, filed with the Commission a verified application (the “Application”) for an order to approve a variance from Rule 318A.f. to authorize a total of up to nine producing completions for the SE¼ of Section 36, Township 1 North, Range 68 West, 6th P.M. (the “Application Lands”), for the production of oil, gas and associated hydrocarbons from the Codell, Niobrara, or “J” Sand Formations.

 

9.     On May 4, 2011, Kerr-McGee, by its attorneys, filed with the Commission a written request to approve the Application based on the merits of the verified Application and the supporting exhibits as is provided for by Rule 511. Sworn written testimony and exhibits were submitted in support of the Application.

 

10.   Testimony and exhibits submitted in support of the Application by Matthew Miller, Landman for Kerr-McGee, showed that Kerr-McGee is the sole leasehold owner of the Application Lands.  Additional testimony indicated that Kerr-McGee plans to drill the Northglenn State #40-36 Well (the “Well”) on the Application Lands from a surface location that is within an established Greater Wattenberg Area (“GWA”) drilling window, and will utilize an existing well pad and production facilities.  Further testimony showed that, depending on the method in which horizontal wellbores are counted by the Commission, the well orientation of the Well could result in a total of up to nine producing completions for the Codell and Niobrara Formations for the Application Lands.

 

11.   Testimony and exhibits submitted in support of the Application by Thomas Birmingham, Geologist for Kerr-McGee, showed that the Niobrara Formation underlies the entirety of the Application Lands with a total thickness ranging from about 300 to 330 feet and is a very tight marl, chalk, and shale that forms a common source of supply.  Additional testimony showed that the Codell Formation underlies the entirety of the Application Lands with a total thickness ranging from 21 to 22 feet with better matrix permeability that the Niobrara Formation.  Further testimony indicated that the “J” Sand Formation underlies the entirety of the Application with a total thickness ranging from 14 to 17 feet and is a tight sandstone forming a common source of supply under the Application Lands.

 

12.  On May 16, 2001, the Commission pulled this matter from its Consent Agenda for purposes of hearing live testimony in support of the Application at its June 27, 2011 meeting.

 

13.  On June 27, 2011, the Commission heard live testimony from the Applicant in support of the Application.  Commissioners resolved their issues concerning this application through the live testimony.

 

14.  The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

 

15.  Kerr-McGee agreed to be bound by oral order of the Commission. 

 

16.  Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order approving a variance from Rule 318A.f. to authorize a total of up to nine producing completions for the SE¼ of Section 36, Township 1 North, Range 68 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell, Niobrara, or “J” Sand Formations.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that a variance from Rule 318A.f. authorizing a total of up to nine producing completions for the SE¼ of Section 36, Township 1 North, Range 68 West, 6th P.M. is hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell, Niobrara, or “J” Sand Formations.

 

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.

           

                        IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

 

                        IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 30 days after the date this Order is mailed by the Commission.

                       

                        IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.

 

                        ENTERED this __30th _ day of June, 2011, as of June 27, 2011.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert A. Willis, Acting Secretary

 

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

June 30, 2011