BEFORE THE OIL AND GAS
CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION ) CAUSE NO. 315
AND ESTABLISHMENT OF FIELD RULES TO )
GOVERN OPERATIONS IN THE VERNON ) ORDER NO. 315-11
FIELD, YUMA COUNTY, COLORADO )
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 8:00 a.m. on July 15, 2008, in Ballroom B of the Brown Palace Hotel, 321 Seventeenth Street, Denver, Colorado, for an order to allow three additional wells, for a total of four wells, in the 160-acre drilling and spacing units in Sections 22 and 23, Township 1 South, Range 44 West, 6th P.M., with the permitted wells to be located no closer than 900 feet from the unit boundary, for the production of gas and associated hydrocarbons from the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1. Rosetta Resources, Inc. (“Rosetta”), 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 August 22, 1978, corrected November 20, 1978, the Commission issued Order No. 315-3, which among other things, established 160-acre drilling and spacing units for certain lands including Sections 22 through 24, Township 1 South, Range 44 West 6th P.M., for the production of gas and associated hydrocarbons from the Niobrara Formation, with the permitted well to be located no closer than 900 feet from the boundaries of the quarter section upon which it is located.
5. On September 21, 2004, and amended on June 14, 2006, the Commission adopted Rule 318B., which among other things, allowed four wells to be drilled in any quarter section, with no more than one (1) well per quarter quarter section, located at least 300 feet from the outer boundary of said quarter section and no closer than 900 feet from any Niobrara Formation well, for certain lands in Townships 1 through 9 North and Townships 1 through 4 South, Ranges 44 through 48 West, 6th P.M., for production from the Niobrara Formation.
6. On March 19, 2008, Rosetta, by its attorney, filed with the Commission a verified application for an order to allow three additional wells, for a total of four, to be drilled in the 160-acre drilling and spacing units in Sections 22 through 24, Township 1 South, Range 44 West 6th, P.M., for the production of gas and associated hydrocarbons from the Niobrara Formation. Additional wells shall be allowed to be drilled and completed as vertical, directional or horizontal wells, at the applicant’s discretion, and completed or recompleted with setbacks identical to those established in Rule 318B.
7. On March 28, 2008, Marion Chapman and Hazel Chapman filed a protest letter to the application, and on April 22, 2008, Dean R. Long filed a protest letter to the application. The protestants objected to the request increasing well density due to concerns over the adverse affect on health, welfare and the environment. On April 30, 2008, a prehearing conference was held wherein the protestants participated by telephone. During the prehearing conference it was determined that the protestants did not have evidence that Rosetta’s operation did not conform to existing Commission rules. The Hearing Officer found that there was no technical merit to the protests. Further, on May 8, 2008, the protestor, Dean R. Long, did appear before the Commission, and provided his sworn statement concerning the adverse impact the application would have on health, welfare and the environment.
8. On June 24, 2008, Rosetta, by its attorney, 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.
9. Testimony and exhibits submitted in support of the application showed that the application lands total approximately 1280 acres, and that 160-acre drilling and spacing units have been previously established for the Niobrara Formation covering application lands.
10. Testimony and exhibits submitted in support of the application showed that Rosetta proposes increased density of wells in the application lands to optimize recovery of reserves from the Niobrara Formation based upon geologic considerations. Additional testimony showed that the Niobrara Formation on the application lands is 28 to 45 feet thick with very low permeability in the range of 0.1 to 1.4 millidarcies which results in a very limited drainage area.
11. Testimony and exhibits submitted in support of the application showed that a Niobrara Formation completion on lands adjacent to the application lands is draining approximately 17.33 acres, and that the estimated ultimate recovery (“EUR”) is expected to be 0.116 BCF. Additional testimony indicated that the request made under this application is the most efficient and economic method to drain the Niobrara Formation on the application lands, and that the request will not violate correlative rights.
12. The above-referenced testimony and exhibits show that the proposed increased well density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
13. Rosetta Resources, Inc. agreed to be bound by oral order of the Commission.
14. Based on the facts stated in the verified application, having resolved the protest regarding increasing density in Section 24, by withdrawing Section 24 from consideration under this application, and based on the Hearing Officer review of the application under Rule 511.b., the Commission should enter an order to allow three additional wells, for a total of four, to be drilled in the 160-acre drilling and spacing units in Sections 22 and 23, Township 1 South, Range 44 West 6th, P.M., for the production of gas and associated hydrocarbons from the Niobrara Formation.
ORDER
NOW, THEREFORE, IT IS ORDERED, that three additional wells, for a total of four, are hereby approved to be drilled in the 160-acre drilling and spacing units in Sections 22 and 23, Township 1 South, Range 44 West 6th, P.M., for the production of gas and associated hydrocarbons from the Niobrara Formation.
IT IS FURTHER ORDERED, that additional wells shall be allowed to be drilled and completed as vertical, directional or horizontal wells, at the applicant’s discretion, and completed or recompleted with setbacks identical to those established in Rule 318B.
IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.
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 thirty (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__________day of July, 2008, as of July 15, 2008.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Patricia C. Beaver, Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
July 21, 2008