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

REPORT OF THE COMMISSION

The Commission heard this matter on December 12, 2011, at the Weld County Administration Building, 1150 O Street, Greeley, Colorado 80631 upon application for an order to establish an approximate 160-acre wellbore spacing unit in Section 26, Township 7 North, Range 65 West, 6^th P.M., for the planned Andrews #26-53 well, at a location authorized by Commission Rule 318A, for production of oil, gas and related hydrocarbons from the J Sand, Codell, and/or Niobrara Formations.

FINDINGS

The Commission finds as follows:

1.    Great Western Oil and Gas Company LLC (“Great Western” 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 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.  Pursuant to Rule 318A.j., Rule 318A. supersedes all prior Commission drilling and spacing orders affecting well location and density requirements of Greater Wattenberg Area wells.  Rule 318A.d. provides that an operator may allocate production to any drilling and spacing unit with respect to a particular Cretaceous Age Formation consistent with the provisions of Rule 318A.  The below-described lands are subject to Rule 318A., for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formation:

Township 7 North, Range 65 West, 6^th P.M.

Section 26:    SW¼

5.  On October 12, 2011, Great Western, by its attorneys, filed with the Commission a verified application (“Application”) for an order to establish an approximate 160-acre wellbore spacing unit in the below-listed lands (“Application Lands”), for the planned Andrews #26-53 well, at a location authorized by Commission Rule 318A, for the production of oil, gas and related hydrocarbons from the J Sand, Codell, and/or Niobrara Formations, without exception being granted by the Director:

Township 7 North, Range 65 West, 6^th P.M.

Section 26:    SW¼

6.  On November 28, 2011, Great Western, 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. Sworn written was submitted in support of the Application.

                        7.  Land Testimony submitted in support of the Application by Royce H. Allen, Land Manager for Great Western, concluded Great Western owns an oil and gas leasehold interest in the Application Lands.  Testimony further concluded that no wells have been drilled in the SW¼ of Section 26 to the Codell, Niobrara, and/or J Sand Formations. 

                        8.  Great Western requests the Commission take administrative notice that previous testimony before the Commission has established that 80-acre drilling and spacing units are not less than the maximum area that can be efficiently and economically drained by wells producing oil, gas and associated hydrocarbons from the Codell, Niobrara, and J Sand Formations in the Application Lands.

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

10.   The Application was reviewed by the Colorado Department of Public Health and Environment (“CDPHE”) pursuant to consultation provisions of Rule 306.d.  In a letter dated December 1, 2011, the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any additional conditions of approval are necessary for approving the amended Application.

11.  Great Western agreed to be bound by oral order of the Commission. 

12.  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 to establish an approximate 160-acre wellbore spacing unit in Section 26, Township 7 North, Range 65 West, 6^th P.M., for the planned Andrews #26-53 well, at a location authorized by Commission Rule 318A, for production of oil, gas and related hydrocarbons from the J Sand, Codell, and/or Niobrara Formations.

ORDER

NOW, THEREFORE IT IS ORDERED, that an approximate 160-acre wellbore spacing unit, is hereby established, in the below-listed lands, for the planned Andrews #26-53 well, at a location consistent with Commission Rule 318A, for production of oil, gas and related hydrocarbons from the J Sand, Codell, and/or Niobrara Formations, without exception being granted by the Director:

Township 7 North, Range 65 West, 6^th P.M.

Section 26:    SW¼

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   16^th  day of December, 2011, as of December 12, 2011.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________         

                                                                                    Peter J. Gowen, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

December 16, 2011