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

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CAUSE NO. 407

 

ORDER NO. 407-351

 

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission at 9:00 a.m. on February 22, 2010, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to designate a 160-acre wellbore spacing unit for the W SW of Section 6, Township 4 North, Range 65 West, 6th P.M., and the E SE of Section 1, Township 4 North, Range 66 West, 6th P.M., for the production of gas and associated hydrocarbons from the Codell and Niobrara Formations, and to pool all nonconsenting interests is said unit, for the development and operation of the Codell and Niobrara Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.     Noble Energy, Inc. (Noble), 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 in accordance with Order No. 407-17, entered November 18, 1985), 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 6, Township 4 North, Range 65 West, 6th P.M., and Section 1, Township 4 North, Range 66 West, 6th P.M., with the drilling and spacing unit to be designated by the operator drilling the first well in the quarter section, (or the Director, if the operator fails to designate). The permitted well shall be located in the center of either 40-acre tract within the drilling and spacing 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 6, Township 4 North, Range 65 West, 6th P.M., and Section 1, Township 4 North, Range 66 West, 6th P.M., with the permitted well locations in accordance with the provisions of Order No. 407-1.

 

6.     On April 27, 1998, the Commission adopted Rule 318A., which, among other things, allowed certain drilling locations to be utilized to drill or twin a well, deepen a well or recomplete a well and to commingle any or all of the Cretaceous Age Formations from the base of the Dakota Formation to the surface.  On December 5, 2005, Rule 318A. was amended to, among other things, allow interior infill and boundary wells to be drilled and wellbore spacing units to be established.  Section 6, Township 4 North, Range 65 West, 6th P.M., and Section 1, Township 4 North, Range 66 West, 6th P.M., are subject to this Rule for the Codell and Niobrara Formations.

 

7.     On December 29, 2009, Noble, by its attorneys, filed with the Commission a verified application to designate a 160-acre wellbore spacing unit for the below-listed lands (to accommodate the Gemini G #06-33 Well), for the production of gas and associated hydrocarbons from the Codell and Niobrara Formations, and to pool all nonconsenting interests in said unit, for the development and operation of the Codell and Niobrara Formations:

 

Township 4 North, Range 65 West, 6th P.M.

Section 6:        W SW

 

Township 4 North, Range 66 West, 6th P.M.

Section 1:        E SE

                                                                        

8.  On February 8, 2010, Noble, 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.  Sworn written testimony and exhibits were submitted in support of the application.

 

9.     Testimony and exhibits submitted in support of the application showed that Noble is a mineral leaseholder underlying the application lands, and that Noble has drilled the Gemini G #06-33 Well at a surface location of 1,114 feet FSL and 218 feet FEL and a bottomhole location of 1,114 feet FSL and 218 feet FEL in Section 1, Township 4 North, Range 66 West, 6th P.M.  Additional testimony showed that Noble has approximately 50% of application lands leased and that there are four nonconsenting interests located within those lands.  Further testimony indicated that offers to participate were sent to the nonconsenting owners, and that said offers were sent via U.S. Mail, at least 30 days prior to the February 22, 2010 hearing.  Testimony showed that the offers to participate and the Authorizations for Expenditure were fair and reasonable, and similar to those prevailing in the area, and that Noble has complied with the requirements of Rule 530.a. and 34-60-116(7)(d), C.R.S.

 

10.   The above-referenced testimony and exhibits show that the granting of the application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of oil/gas, and will not violate correlative rights.

 

11.   Noble agreed to be bound by oral order of the Commission. 

 

12.   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 to designate a 160-acre wellbore spacing unit for the W SW of Section 6, Township 4 North, Range 65 West, 6th P.M., and the E SE of Section 1, Township 4 North, Range 66 West, 6th P.M., for the production of oil and gas and associated hydrocarbons from the Codell and Niobrara Formations, and to pool all nonconsenting interests in said unit, for the development and operation of the Codell and Niobrara Formations.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that, a 160-acre wellbore spacing unit is hereby designated for the below-listed lands (to accommodate the Gemini G #06-33 Well), for the production of oil and gas and associated hydrocarbons from the Codell and Niobrara Formations, and that, 

 

1.  Pursuant to the provisions of 34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act of the State of Colorado, the nonconsenting interests in said wellbore spacing unit, described below, are hereby pooled, for the development and operation of the Codell and Niobrara Formations:

 

Township 4 North, Range 65 West, 6th P.M.

Section 6:        W SW

 

Township 4 North, Range 66 West, 6th P.M.

Section 1:        E SE

 

2.     The production obtained from the wellbore 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 the wellbore spacing unit; each owner of an interest in the wellbore spacing unit shall be entitled to receive its share of the production of the well located on the wellbore spacing unit applicable to its interest in the wellbore spacing unit.

 

3.     Each mineral owner being involuntarily pooled is hereby deemed to have elected not to participate and shall therefore be deemed to be nonconsenting as to the well; and, the consenting owners shall be entitled to recover costs from each nonconsenting owners share of production as provided for by 34-60-116(7), C.R.S.

 

4.     Each nonconsenting mineral owner within the wellbore spacing unit shall be treated as the owner of a landowner's royalty to the extent of 12.5% of its record title interest, whatever that interest may be, until such time as the consenting owners recover, 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, each nonconsenting mineral owner shall then own its proportionate 8/8ths share of the well, surface facilities and production, and then be liable for its proportionate share of further costs incurred in connection with the well as if it had originally agreed to the drilling.

 

5.     The operator of the well drilled on the above-described unit shall furnish each 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.

 

6.     Nothing in this order is intended to conflict with 34-60-116, C.R.S., as amended.  Any conflict that may arise shall be resolved in favor of the statute.

 

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 March, 2010, as of February 22, 2010.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Carol Harmon, Secretary

 

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

March 9, 2010