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. 407-402

 

 

REPORT OF COMMISSION

 

                        This cause came on for hearing before the Commission on May 16, 2011, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to establish an approximate 320-acre wellbore spacing unit for certain lands located in Sections 2 and 11, Township 4 North, Range 65 West, 6th P.M., and approve of one horizontal well within the unit (to accommodate the planned Lower Latham PC G #11-69HN Well), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.     Noble Energy, Inc. (“Noble” or “Applicant”), 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 Sections 2 and 11, Township 4 North, Range 65 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 Sections 2 and 11, Township 4 North, Range 65 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.  Pursuant to Rule 318A.j., Rule 318A. supersedes all prior Commission drilling and spacing orders affecting well location and density requirements of Greater Wattenberg Area wells.  Rule 318A.d. provides that an operator may allocate production to any drilling and spacing unit with respect to a particular Cretaceous Age Formation consistent with the provisions of Rule 318A.  Sections 2 and 11, Township 4 North, Range 65 West, 6th P.M. are subject to Rule 318A., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

7.     On March 17, 2011, Noble, by its attorneys, filed with the Commission a verified application (the “Application”) for an order to establish an approximate 320-acre wellbore spacing unit for the below-listed lands (the “Application Lands”), and approve of one horizontal well within the unit (to accommodate the planned Lower Latham PC G #11-69HN Well), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 460 feet from the boundary of the unit, without exception being granted by the Director of the Commission:

                                       

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

Section 2:

Section 11:

S˝ S˝

N˝ N˝

 

Noble states that this Application is not requesting the change of any established 80-acre drilling and spacing units or the established distribution of proceeds for any existing vertical Niobrara Formation wells.  Noble will allocate and distribute proceeds from the horizontal well on a 320-acre basis.

 

8.     On May 4, 2011, 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. Sworn written testimony and exhibits were submitted in support of the Application.

 

9.     Land testimony and exhibits submitted in support of the Application by Sean Howley, Land Negotiator for Noble, showed: 1) Noble owns a substantial leasehold interest in the Application Lands; 2) Noble has entered into a surface use agreement with the surface owner and has obtained a consent letter allowing Noble to drill from outside a GWA window as defined in Rule 318A.a. and further than 50 feet from an existing surface well location as provided in Rule 318A.c.(2); 3) Noble will not change the established 80-acre drilling and spacing units for any existing vertical Niobrara Formation wells, nor change the established distribution of proceeds for any existing vertical Niobrara Formation wells; and 4) Noble will allocate and distribute proceeds from the Well on a 320-acre basis.

 

10.   Geologic testimony and exhibits submitted in support of the Application by Ron Pritchett, Senior Geologist for Noble, showed: 1) the regional dip of the Niobrara Formation in the area of the Application Lands, is less then ˝ degree to the west; 2) total thickness of the Niobrara Formation ranges from approximately 220 feet to 312 feet under the Application Lands; and 3) the proposed well is expected to encounter a total Niobrara thickness of greater than 280 feet for most of the wellbore.

 

11.   Engineering testimony and exhibits submitted in support of the Application by John Arsenault, Senior Reservoir Engineer for Noble, showed that: 1) by targeting the Niobrara Formation horizontally, the Well will efficiently develop resources in the Niobrara;  2) horizontal wells in the area recover resources that would not otherwise be recovered; 3) production from existing vertical wells in the vicinity of horizontal wells is not negatively impacted by drilling horizontal wells, but to the extent that any nearby vertical wells were negatively impacted, the effect was temporary; and 4) the proposed Well is economic. 

 

12.   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 gas, and will not violate correlative rights.

 

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

 

14.   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 establishing an approximate 320-acre wellbore spacing unit for certain lands located in Sections 2 and 11, Township 4 North, Range 65 West, 6th P.M., and approve of one horizontal well within the unit (to accommodate the planned Lower Latham PC G #11-69HN Well), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

                        NOW, THEREFORE IT IS ORDERED, that an approximate 320-acre wellbore spacing unit is established consisting of the below-listed lands, and one horizontal well is hereby approved within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

 

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

Section 2:

Section 11:

S˝ S˝

N˝ N˝

                                   

                        IT IS FURTHER ORDERED, that the treated interval of the wellbore shall be located no closer than 460 feet from the boundary of the unit, without exception being granted by the Director of the Commission.

 

IT IS FURTHER ORDERED, that this Order shall not change of any established 80-acre drilling and spacing units or the established distribution of proceeds for any existing vertical Niobrara Formation wells.  The operator shall allocate and distribute proceeds from the horizontal well on a 320-acre basis.

 

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.

           

                        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 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      23rd      day of May, 2011, as of May 16, 2011.

           

                                                                        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

May 23, 2011