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 407-539

 

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on January 23, 2012, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, upon application for an order to establish an approximate 640-acre drilling and spacing unit for Section 20, Township 7 North, Range 62 West, 6th P.M., and approve up to two horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1. Chesapeake Exploration, LLC (“Chesapeake” 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 April 27, 1998, the Commission adopted Rule 318A., the Greater Wattenberg Well Location Rule (“GWA” rule), 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. Section 20, Township 7 North, Range 62 West, 6th P.M. is subject to Rule 318A., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

5. On November 23, 2011, Chesapeake, by its attorneys, filed with the Commission a verified application (“Application”) for an order to establish an approximate 640-acre drilling and spacing unit for the below-listed lands (“Application Lands”), and authorize up to two horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the permitted wellbore to be located no closer than 460 feet from the boundary of the unit, without exception being granted by the Director:

 

Township 7 North, Range 62 West, 6th P.M.

            Section 20:    All

 

6. On January 9, 2012, Chesapeake, by its attorneys, 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.

 

7. Land testimony and exhibits submitted in support of the Application by Nick Watkins, District Landman for Chesapeake, showed that Chesapeake is a leaseholder of the Application Lands.

 

8. Geologic testimony and exhibits submitted in support of the Application by Ryan C. Sonntag, Associate Geologist for Chesapeake, showed that the Niobrara Formation underlies the entirety of the Application Lands with a total thickness of approximately 200 feet to 300 feet under the proposed spacing area with a regional dip of approximately 50 feet per mile to the west.

 

9. Engineering testimony and exhibits submitted in support of the Application by Keeley Cuccio, Associate Reservoir Engineer for Chesapeake, showed an estimated ultimate recovery of 167,000 barrels of oil and 609,000,000 cubic feet of gas for a well drilled within the Application Lands, with a resulting drainage area of 238 acres.  Testimony also showed that the proposed 640-acre drilling and spacing unit is not smaller than the maximum area that can be efficiently drained by one horizontal Niobrara well.

 

10. 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.

 

11.  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 January 6, 2012, the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any additional conditions of approval are necessary for approving the Application.

 

12.  Chesapeake agreed to be bound by oral order of the Commission.  

 

13.  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 an approximate 640-acre drilling and spacing unit for Section 20, Township 7 North, Range 62 West, 6th P.M., and authorize up to two horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

                        NOW, THEREFORE IT IS ORDERED, that an approximate 640-acre drilling and spacing unit, is hereby established, for the below-listed lands, and up to two horizontal wells, are hereby approved, within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the permitted wellbore to be located no closer than 460 feet from the boundary of the unit, without exception being granted by the Director:

 

Township 7 North, Range 62 West, 6th P.M.

                                    Section 20:    All

 

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   26th  day of January, 2012, as of January 23, 2012.

           

                                                                        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

January 26, 2012