BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND ) CAUSE NO. 381
ESTABLISHMENT OF FIELD RULES TO GOVERN )
OPERATIONS IN THE BRACEWELL FIELD, ) ORDER NO. 381-8
WELD COUNTY, COLORADO )
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 10:00 a.m. on June 5, 2006, in the Council Chamber Room of the Ambulance Building, 304 West 3rd Street, Wray, Colorado, for an order to reduce the size of the 80-acre drilling and spacing unit consisting of the W½ SW¼ of Section 32, Township 6 North, Range 66 West, 6th P.M., established for the Codell and Niobrara Formations, to 40-acre drilling and spacing units consisting of the SW¼ SW¼ and NW¼ SW¼ of said Section 32 so that production from the "J" Sand, Codell, Niobrara and Sussex Formations can be commingled. In addition, the order should establish 40-acre drilling and spacing units consisting of the SW¼ SW¼ and NW¼ SW¼ of Section 32, Township 6 North, Range 66 West, 6th P.M., for the production of gas and associated hydrocarbons from the "J" Sand and Sussex Formations.
FINDINGS
The Commission finds as follows:
1. Orr Energy, LLC ("Orr"), 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 February 18, 1985, the Commission issued Order No. 381-5, which among other things, established 80-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Codell and Niobrara Formations underlying certain lands, including Section 32, Township 6 North, Range 66 West, 6th P.M.
5. Rule 318.a. of the Rules and Regulations of the Commission requires that wells drilled in excess of two thousand five hundred (2,500) feet in depth be located not less than six hundred (600) feet from any lease line, and located not less than one thousand two hundred (1,200) feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. The W½ SW¼ of Section 32, Township 6 North, Range 66 West, 6th P.M. is subject to this rule for the "J" Sand and Sussex Formations.
6. On April 14, 2006, Orr Energy, LLC, by its attorney, filed with the Commission a verified application for an order to reduce the size of the 80-acre drilling and spacing unit consisting of the W½ SW¼ of Section 32, Township 6 North, Range 66 West, 6th P.M., established for the Codell and Niobrara Formations, to 40-acre drilling and spacing units consisting of the SW¼ SW¼ and NW¼ SW¼ of said Section 32 so that production from the "J" Sand, Codell, Niobrara and Sussex Formations can be commingled. In addition, the order should establish 40-acre drilling and spacing units consisting of the SW¼ SW¼ and NW¼ SW¼ of Section 32, Township 6 North, Range 66 West, 6th P.M., for the production of gas and associated hydrocarbons from the "J" Sand and Sussex Formations. No wells currently produce from any of these formations in the application lands.
7. Testimony and exhibits presented at the administrative hearing recounted geologic and engineering testimony presented in support of Rule 318A. showing there was little or no depletion found in wells drilled on 20-acre density to the Codell, Niobrara, or "J" Sand Formations in the application area. Additional testimony showed that, based on this testimony, the application requesting segregation of the current 80-acre drilling and spacing unit into two 40-acre drilling and spacing units would not harm correlative rights.
8. Testimony and exhibits presented at the administrative hearing showed that Ed Orr of Orr Energy, LLC, is the surface owner of the entire 80-acre drilling and spacing unit, that he is the mineral owner in all except six (6) acres of the drilling and spacing unit, that segregation of the 80-acre drilling and spacing unit would not adversely affect correlative rights, and that no protests to the application have been received.
9. Orr Energy, LLC, agreed to be bound by oral order of the Commission.
10. Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to segregate the 80-acre drilling and spacing unit consisting of the W½ SW¼ of Section 32, Township 6 North, Range 66 West, 6th P.M., established for the Codell and Niobrara Formations, into two (2) 40-acre drilling and spacing units consisting of the SW¼ SW¼ and NW¼ SW¼ of said Section 32 so that production from the "J" Sand, Codell, Niobrara and Sussex Formations can be commingled. In addition, the order should establish 40-acre drilling and spacing units consisting of the SW¼ SW¼ and NW¼ SW¼ of Section 32, Township 6 North, Range 66 West, 6th P.M., for the production of gas and associated hydrocarbons from the "J" Sand and Sussex Formations. No wells currently produce from any of these formations in the application lands.
ORDER
NOW, THEREFORE, IT IS ORDERED, that the 80-acre drilling and spacing unit consisting of the W½ SW¼ of Section 32, Township 6 North, Range 66 West, 6th P.M., established for the Codell and Niobrara Formations, is hereby segregated into 40-acre units consisting of the SW¼ SW¼ and NW¼ SW¼ of said Section 32 so that production from the "J" Sand, Codell, Niobrara and Sussex Formations can be commingled.
IT IS FURTHER ORDERED, that 40-acre drilling and spacing units consisting of the SW¼ SW¼ and NW¼ SW¼ of Section 32, Township 6 North, Range 66 West, 6th P.M., are hereby established for the production of gas and associated hydrocarbons from the "J" Sand and Sussex Formations.
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.
9;ENTERED this__________day of June, 2006, as of June 5, 2006.
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
June 23, 2006