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 MULTIPLE FORMATIONS, LEFT HAND FIELD, KIOWA COUNTY, COLORADO

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CAUSE NO. 252

 

DOCKET NO. 1412-SP-2203

 

ORDER NO. 252-13

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on December 15, 2014 at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, CO, upon application for an order to establish an approximate 80-acre drilling and spacing unit for Section 21, Township 18 South, Range 47 West, 6th P.M., and approve up to one horizontal well within the unit, for the production of oil, gas, and associated hydrocarbons from the Shawnee, Lansing-Kansas City, Marmaton, Cherokee, Morrow, Keyes and Mississippian System (St. Genevieve to Warsaw) Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Bayhorse Petroleum, LLC  (Operator No. 10234) (“Bayhorse” 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.

 

4.         Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that, on unspaced lands, wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. Section 21, Township 18 South, Range 47 West, 6th P.M. are subject to this Rule for the Shawnee, Lansing-Kansas City, Marmaton, Cherokee, Morrow, Keyes and Mississippian System (St. Genevieve to Warsaw) Formations.

 

5.         On October 16, 2014, Bayhorse, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to establish an approximate 80-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Shawnee, Lansing-Kansas City, Marmaton, Cherokee, Morrow, Keyes and Mississippian System (St. Genevieve to Warsaw) Formations, with the productive interval of the wellbore to be located no closer than 600’ from the boundaries of the 80-acre drilling and spacing unit, with the exception of twenty-seven feet (27’) from the western boundary and 364’ from the southern boundary feet from the unit boundaries, and no closer than  feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:

 

Township 18 South, Range 47 West, 6th  P.M.

Section 21:      S½ NE¼

 

6.         On November 24, 2014, Bayhorse, 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.

 

            7.         On December 1, 2014, Rod Vaughn submitted a protest. The protest was converted to a Rule 510 statement on December 10, 2014.

 

8.         Land testimony and exhibits submitted in support of the Application by Larry F. Manikowski, President & CEO/CFO for Bayhorse, showed that both the mineral and surface interests are owned in fee, and that Bayhorse owns a partial leasehold/mineral ownership interest in the Application Lands.

           

            9.         Geologic testimony and exhibits submitted in support of the Application Robert Say, a consulting petroleum geologist for Bayhorse, showed the Shawnee, Lansing-Kansas City, Marmaton, Cherokee, Morrow, Keyes and Mississippian System (St. Genevieve to Warsaw) Formations is present throughout the Application Lands, is approximately 158 feet thick, and is generally of uniform thickness throughout the Application Lands.

 

10.       Engineering testimony and exhibits submitted in support of the Application by Kenneth J. Cooper, of Petrotek Engineering Corporation for Bayhorse, showed that the drainage area for analog horizontal Shawnee, Lansing-Kansas City, Marmaton, Cherokee, Morrow, Keyes and Mississippian System (St. Genevieve to Warsaw) Formation wells are estimated at 66 acres, and an appropriate 80-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Shawnee, Lansing-Kansas City, Marmaton, Cherokee, Morrow, Keyes and Mississippian System (St. Genevieve to Warsaw) Formations.

 

11.       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 hydrocarbons, and will not violate correlative rights.

 

12.       Bayhorse agreed to be bound by oral order of the Commission.

 

13.       Based on the facts stated in the verified Application, having resolved all protests, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to establish an approximate 80-acre drilling and spacing unit for Section 21, Township 18 South, Range 47 West, 6th P.M., and approve up to one horizontal well within the unit, for the production of oil, gas, and associated hydrocarbons from the Shawnee, Lansing-Kansas City, Marmaton, Cherokee, Morrow, Keyes and Mississippian System (St. Genevieve to Warsaw) Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         One approximate 80-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to one horizontal well within the unit, is hereby approved, for the production of oil, gas and associated hydrocarbons from the Shawnee, Lansing-Kansas City, Marmaton, Cherokee, Morrow, Keyes and Mississippian System (St. Genevieve to Warsaw) Formations:

 

Township 18 South, Range 47 West, 6th  P.M.

Section 21:      S½ NE¼

 

2.         The productive interval of the wellbore shall be located no closer than 600’ from the boundaries of the 40-acre drilling and spacing unit, with the exception of twenty-seven feet (27’) from the western boundary and 364’ from the southern boundary feet from the unit boundaries, without exception being granted by the Director.

 

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 7th day of January, 2015, as of December 15, 2014.          

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By__________________________________

Jill Dorancy, Acting Secretary