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
|
)
)
)
)
)
)
)
|
CAUSE NO. 232
DOCKET NO. 170500240
TYPE: SPACING
ORDER NO. 232-353
|
REPORT OF THE
COMMISSION
The Commission
heard this matter on May 1, 2017, at the Colorado Oil and Gas Conservation
Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for
an order to: 1) confirm that Order No. 232-83 established an approximate
320-acre drilling and spacing unit for the E˝ of Section 13, Township 1 North,
Range 64 West, 6th P.M., for the production of oil, gas, and
associated hydrocarbons from the “J” Sand, Codell, Niobrara, Sussex and Shannon
Formations; and 2) confirm that the remaining terms of Order No. 232-83 are
consistent with those set forth in Order Nos. 232-80 and 232-82.
FINDINGS
The Commission
finds as follows:
1.
HRM Resources II, LLC (Operator No.
10548) (“HRM” or “Applicant”) 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.
5.
The Commission’s records do
not contain a copy of Order No. 232-83.
6.
On May 19, 2016, HRM, by its
attorneys, filed with the Commission a verified application (“Application”) for
an order to: 1) confirm that Order No. 232-83 established an approximate
320-acre drilling and spacing unit for the below-described lands (“Application
Lands”) for the production of oil, gas, and associated hydrocarbons from the “J”
Sand, Codell, Niobrara, Sussex and Shannon Formations; and 2) confirm that the
remaining terms of Order No. 232-83 are consistent with those set forth in
Order Nos. 232-80 and 232-82:
Township
1 North, Range 64 West, 6th P.M.
Section
13: E˝
7.
On April 10, 2017, HRM, 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 testimony and exhibits were submitted in support of the
Application.
8.
Testimony and exhibits
submitted in support of the Application by Janet Paul, Landman for HRM, showed
that HRM owns substantial leasehold interests in the Application Lands. The
testimony further showed that HRM and Commission staff, working together,
performed a full and diligent search of the Commission’s records, which search failed
to locate the order. Testimony further showed that the available evidence
demonstrates that the terms of Order Nos. 232-83 and 232-84 are also
substantially identical to Order Nos. 232-80 and 232-82, and that Order No.
232-83 should be found to have established an approximate 320-acre drilling and
spacing unit for the Application Lands for the production of oil, gas, and
associated hydrocarbons from the “J” Sand, Codell, Niobrara, Sussex and Shannon
Formations, on terms and conditions consistent with Order Nos. 232-80 and
232-82.
9.
The minutes from the
Commission’s hearing on September 21, 1992 show that the Commission entered a
series of orders, all of which established 320-acre drilling and spacing units
throughout the Greater Wattenberg Area for the Dakota Formation to allow the
recompletion of Dakota Formation wells to the “J” Sand, Codell, Niobrara,
Sussex and Shannon Formations. Such orders include Order Nos. 232-80, 232-82,
232-83, and 232-84.
10.
In regards to Order Nos.
232-80 and 232-82, the original orders are available in the Commission’s
records. The terms of Order Nos. 232-80 and 232-82 are substantially identical.
11.
Land testimony also showed
that the Brnak 33-13 Well (API No. 05-123-23111) is located on the Application
Lands and had been producing for approximately seven years. Further, the Brnak
33-13 Well was originally completed as a gas well for which a 320 acre drilling
and spacing unit would be the appropriate size.
12.
The above-referenced
testimony and exhibits show that Order No. 232-83 established an approximate
320-acre drilling and spacing unit for the Application Lands, for production of
oil, gas, and associated hydrocarbons from the “J” Sand, Codell, Niobrara,
Sussex and Shannon Formations, on terms and conditions consistent with Order Nos.
232-80 and 232-82.
13.
HRM agreed to be bound by
oral order of the Commission.
14.
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 confirming that Order No. 232-83 established an approximate 320-acre
drilling and spacing unit for the E˝ of Section 13, Township 1 North, Range 64
West, 6th P.M. for production of oil, gas and associated
hydrocarbons from the “J” Sand, Codell, Niobrara, Sussex and Shannon
Formations, and that the remaining terms of Order No. 232-83 are consistent
with those set forth in Order Nos. 232-80 and 232-82.
ORDER
IT IS HEREBY
ORDERED:
1.
Order No. 232-83 established
an approximate 320-acre drilling and spacing unit for the below-described
lands, for production of oil, gas, and associated hydrocarbons from the “J”
Sand, Codell, Niobrara, Sussex and Shannon Formations, and the remaining terms
of Order No. 232-83 are consistent with those set forth in Order Nos. 232-80
and 232-82:
Township
1 North, Range 64 West, 6th P.M.
Section
13: E˝
2.
The Brnak 33-13 Well (API No.
05-123-23111) is designated as the permitted well for the unit and the location
of the well is hereby designated as a legal location within drilling and
spacing unit established for the Application Lands by Order No. 232-83.
3.
The Dakota, “J” Sand, Codell
and Niobrara Formations constitute common sources of supply of oil, gas and
associated hydrocarbons underlying the Application Lands.
4.
The Application Lands
constitute the designated drilling and spacing unit for the production of oil,
gas, and associated hydrocarbons from the “J” Sand, Codell, Niobrara, Sussex
and Shannon Formations.
5.
Multiple zone completions and
downhole commingling of oil, gas and associated hydrocarbons are hereby
approved for the Dakota, “J” Sand, Codell, Niobrara, Sussex and Shannon
Formations in the Brnak 33-13 Well.
6.
The operator of the Brnak
33-13 Well may allocate the commingled production of oil, gas, and associated
hydrocarbons from the Brnak 33-13 Well from the Dakota, “J” Sand, Codell,
Niobrara, Sussex and/or Shannon Formations in accordance with any reasonable method
that is equitable to all of the persons sharing in the costs and/or proceeds
from the well. However, any allocation method shall be subject to the
Commission's right to object on its own account or upon application of any
interested party. Any objection or application filed with the Commission shall
be filed within 30 days after receipt of notice. If no such party, or the
Commission itself, objects to the proposed allocation method, then the operator
may allocate production without action by the Commission.
7.
Upon objection or application
the Commission shall hear the matter in accordance with the rules of the
Commission and may approve an allocation method if the method is equitable and
has been approved in writing: (1) by those persons who own at least 80% of the
cost-bearing interests in each formation from which commingled production will
be obtained, and (2) by the owners of at least 80% of the cost-free interests,
such as royalties, overriding royalties and production payments, in each
formation from which commingled production will be obtained.
8.
Any application, protest or
objection filed pursuant to these rules shall be subject to the rules of
practice and procedure of the Commission; however, in the event of a conflict
between the terms and provisions of this Order and the Commission's rules of
practice and procedure, the terms and provisions of this Order shall control.
IT IS FURTHER
ORDERED:
1.
The provisions contained in
the above order shall become effective immediately.
2.
The Commission expressly
reserves the 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 10th day of May, 2017,
as of May 1, 2017.
OIL
AND GAS CONSERVATION COMMISSION
OF
THE STATE OF COLORADO
By____________________________________
Peter
Gowen, Acting Secretary