BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
ORDER NO. 407-333 |
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission 9:00 a.m. on July 14, 2009 at the Hotel Colorado, in the Devereux Room, 526 Pine Street, Glenwood Springs, Colorado, for an order to pool all nonconsenting interests in the established 80-acre stand-up drilling and spacing units consisting of the W½ SE¼ and the E½ SE¼ of Section 21, Township 5 North, Range 67 West, 6th P.M., for the development and operation of the Codell and Niobrara Formations.
FINDINGS
The Commission finds as follows:
1. Unioil, 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 December 19, 1983, the Commission issued Order No. 407-1 (amended on March 29, 2000), which among other things, established 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Codell Formation underlying certain lands, including Section 21, Township 5, North, Range 67 West, 6th P.M., with the unit to be designated by the operator drilling the first well in the quarter section. The permitted well shall be located in the center of either 40-acre tract within the unit with a tolerance of 200 feet in any direction. The operator shall have the option to drill an additional well on the undrilled 40-acre tract in each 80-acre drilling and spacing unit.
5. On February 19, 1992, the Commission issued Order No. 407-87 (amended August 20, 1993), which among other things, established 80-acre drilling and spacing units, for the production of oil and/or gas from the Codell and Niobrara Formations underlying certain lands, including Section 21, Township 5, North, Range 67 West, 6th P.M., with the permitted well locations in accordance with the provisions of Order No. 407-1.
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6. On May 26, 2009, Unioil, by its attorney, filed with the Commission a verified application for an order to pool all nonconsenting interests in the established 80-acre stand-up drilling and spacing units consisting of the W½ SE¼ and the E½ SE¼ of Section 21, Township 5 North, Range 67 West, 6th P.M., for the development and operation of the Codell and Niobrara Formations. Unioil has drilled the below-listed wells for which it is requested that this order apply retroactive to the spud date of each well:
· Wiedeman 33-21U
· Wiedeman 34-21U
· Wiedeman 43-21U
· Wiedeman 44-21U
7. On July 2, 2009, Unioil, 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 as is provided for by Rule 511.c. Sworn written testimony and exhibits were submitted in support of the application.
8. Testimony and exhibits submitted in support of the application showed that Unioil is the majority mineral leaseholder of lands underlying the application lands. Additional testimony indicated that an entity owning a leasehold working interest (namely, OMX Corporation (“OMX”)) has been offered an opportunity to participate in the afore-referenced wells, but has failed to respond to such offers. Further testimony showed that Unioil has a 97.53111% working interest in the drilling and spacing units, and that the sole non-participating mineral interest owner has a 2.46889% interest in the unit. Testimony showed that said offers were sent via US Mail, at least 30 days prior to the July 14, 2009 hearing, to the nonconsenting owner, and that the offers were returned as undeliverable and that Unioil has been unable to locate the nonconsenting owner, or a successor in interest, despite diligent efforts. Further testimony showed that the offers to participate and the Authorizations for Expenditures were fair and reasonable, and similar to those prevailing in the area, and that Unioil has complied with the requirements of Rule 530.a. and §34-60-117(7)(d), C.R.S.
9. Unioil 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 based on the Hearing Officer review of the application under Rule 511.c., the Commission should enter an order to pool the nonconsenting interest in the established 80-acre stand-up drilling and spacing units consisting of the W½ SE¼ and the E½ SE¼ of Section 21, Township 5 North, Range 67 West, 6th P.M., for the development and operation of the Codell and Niobrara Formations.
ORDER
NOW, THEREFORE IT IS ORDERED, that, 1. Pursuant to the provisions of §34-60-116 C.R.S., as amended, of the Oil and Gas Conservation Act, the leasehold working interests of the nonconsenting owner in the established 80-acre stand-up drilling and spacing units consisting of the W½ SE¼ and the E½ SE¼ of Section 21, Township 5 North, Range 67 West, 6th P.M., are hereby pooled, for the development and operation of the Codell and Niobrara Formations, and that this pooling order shall apply retroactive to the spud date of each below-listed well:
· Wiedeman 33-21U
· Wiedeman 34-21U
· Wiedeman 43-21U
· Wiedeman 44-21U
2. The production obtained from a drilling and spacing unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within each drilling and spacing unit; each owner of an interest in each drilling and spacing unit shall be entitled to receive his/her share of the production of the well located on each drilling and spacing unit applicable to his/her interest in each drilling and spacing unit.
3. OMX is hereby deemed to have elected not to participate in the development of the afore-referenced wells, and shall therefore be deemed to be nonconsenting as to the wells and is subject to the penalties as provided for by §34-60-116 (7), C.R.S., except that Unioil may elect to proceed under the terms of any Joint Operating Agreement applicable to those lands to which OMX is a party.
4. The nonconsenting mineral owner within the drilling and spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of his/her record title interest, whatever that interest may be, until such time as the consenting owner recovers, only out of the nonconsenting owner's proportionate 87.5% share of production, the costs specified in §34-60-116 (7)(b), C.R.S. as amended. After recovery of such costs, the nonconsenting mineral owner shall then own his/her proportionate 8/8ths share of the well, surface facilities and production, and then be liable for his/her proportionate share of further costs incurred in connection with the well as if he/she had originally agreed to the drilling.
5. The operator of any well drilled on the above-described unit shall furnish the nonconsenting owner with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.
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, 2009, as of July 14, 2009.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________________
Robert A. Willis, Acting Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
July 22, 2009