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. 407-500

 

 

REPORT OF THE COMMISSION

 

                        The Commission heard this matter on October 31, 2011, at the City of Littleton Council Chambers, 2255 West Berry Avenue, Littleton, Colorado 80120 upon application for an order to establish one approximate 320-acre wellbore spacing unit within Section 17, Township 4 North, Range 64 West, 6th P.M., Weld County, and authorize one horizontal well within the unit for development and 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 Section 17, Township 4 North, Range 64 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 17, Township 4 North, Range 64 West, 6th P.M., with the permitted well locations in accordance with the provisions of Order No. 407-1.  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 the above-described lands, 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.

 

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.  Section 17, Township 4 North, Range 64 West, 6th P.M. is subject to Rule 318A., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

7.   On May 23, 2011, the Commission issued Order No. 407-403, which among other things, established an approximate 320-acre wellbore spacing unit and approved one horizontal well within the unit for the production of oil and/or gas and associated hydrocarbons from the Niobrara Formation underlying certain lands, which included the W½ SW¼, Section 17, Township 4 North, Range 64 West, 6th P.M.

 

8.   On May 23, 2011, the Commission issued Order No. 407-404, which among other things, established an approximate 320-acre wellbore spacing unit and approved one horizontal well within the unit for the production of oil and/or gas and associated hydrocarbons from the Niobrara Formation underlying certain lands, which included the N½ N½, Section 17, Township 4 North, Range 64 West, 6th P.M.

 

9.   On May 23, 2011, the Commission issued Order No. 407-415, which among other things, established an approximate 320-acre wellbore spacing unit and approved one horizontal well within the unit for the production of oil and/or gas and associated hydrocarbons from the Niobrara Formation underlying certain lands, which included the S½ N½, Section 17, Township 4 North, Range 64 West, 6th P.M.

 

10.   On August 31, 2011, Noble, by its attorneys, filed with the Commission a verified application (“Application”) for an order to: 1) establish an approximate 320-acre wellbore spacing unit for the below-listed lands (“Application Lands”); and 2) approve one horizontal well within the unit to accommodate the planned Sandy Hills PC C17-67HN 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 64 West, 6th P.M.

Section 17:

 

Noble states that it is not changing the established 80-acre drilling and spacing units for any existing vertical Niobrara Formation wells.  Noble further states that it is not changing the established distribution of proceeds for any existing vertical Niobrara Formation wells subject to Order No. 407-87.  Noble will allocate and distribute proceeds from the Well on a 320-acre basis. 

 

11.  On October 18, 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.

 

                        12.  Land testimony and exhibits submitted in support of the Application by Julie Jenkins, Land Manager for Noble, showed:  1) Noble is a leaseholder of the Application Lands; 2) Noble has entered into a surface use agreement with the surface owner; and 3) Noble is not changing the established 80-acre drilling and spacing units for any existing vertical Niobrara Formation wells.

 

                        13.  Geology testimony and exhibits submitted in support of the Application by Ron Pritchett, Senior Geologist for Noble, showed:  1) the Niobrara Formation has a regional dip of less than ½ degree to the west in the application area; 2) total thickness ranges from approximately 272 to 298 feet under the Application Lands; 3) the proposed well is estimated to encounter a total Niobrara thickness greater than 275 feet through most of the wellbore; and 4) the Niobrara Formation thins across a portion of the Application Lands.

 

14.  Engineering testimony and exhibits submitted in support of the Application by Ryan Sullivan, Operations Engineer for Noble, showed:  1) by targeting the Niobrara Formation horizontally, the planned wells will efficiently develop resources in the Niobrara;(2) horizontal wells in the area recover resources that would not otherwise be recovered; 3) correlative rights will be protected; and 4) the proposed well is economic.

 

15.  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 hydrocarbons, and will not violate correlative rights.

 

16.   The Application was reviewed by the Colorado Department of Public Health and Environment (“CDPHE”) pursuant to consultation provisions of Rule 306.d.  In a letter dated October 21, 2011, the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any additional conditions of approval are necessary for approving the amended Application.

 

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

 

                        18.  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 establish one approximate 320-acre wellbore spacing unit within Section 17, Township 4 North, Range 64 West, 6th P.M., Weld County, and authorize one horizontal well within the unit for development and 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 hereby established, for the below-listed lands, and one horizontal well within the unit is hereby approved, to accommodate the planned Sandy Hills PC C17-67HN 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 64 West, 6th P.M.

Section 17:

 

IT IS FURTHER ORDERED, 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.  Noble 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   7th  day of November, 2011, as of October 31, 2011.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________         

                                                                                    Peter J. Gowen, Acting Secretary

 

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

November 7, 2011