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 AN UNNAMED FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

ORDER NO. 407-559

CORRECTED

 

REPORT OF THE COMMISSION

 

                        This cause came on for hearing before the Commission on June 27, 2011, Elbert County Fairgrounds, Ag Building, 95 Ute Avenue, Kiowa, Colorado, for an order to establish seven (7) approximate 640-acre drilling and spacing units for certain lands located in Township 7 North, Ranges 61 and 62 West, 6th P.M., and approve one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.     Marathon Oil Company (“Marathon” 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., 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.  Certain lands located in Townships 6 and 7 North, Ranges 61 through 63 West, 6th P.M. are subject to this Rule for the Niobrara Formation.

 

5.     On April 28, 2011, Marathon, by its attorneys, filed with the Commission a verified application (the “Application”) for an order to establish fourteen (14) approximate 640-acre drilling and spacing units for the below-listed lands, (the “Application Lands”) and approve one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore for the permitted well to be no closer than 600 feet from the unit boundaries without exception being granted by the Director:

 

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

Sections 5 and 6

 

Township 6 North, Range 63 West, 6th P.M. 

Section 1

 

Township 7 North, Range 61 West, 6th P.M. 

Sections 19 and 30

 

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

Sections 24 and 28 through 33

 

Township 7 North, Range 63 West, 6th P.M. 

Sections 25 and 36

 

6.     On June 14, 2011, Marathon, by its attorneys, amended its application to withdraw its application for the following lands:

 

Township 6 North, Range 63 West, 6th P.M.

Section 1

 

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

Section 29

 

Township 7 North, Range 63 West, 6th P.M.

Section 25

 

As of June 14, 2011, the below-listed lands (the “Amended Application Lands”) remained subject to the Application:

 

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

Sections 5 and 6

 

Township 7 North, Range 61 West, 6th P.M.

Sections 19 and 30

 

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

Sections 24, 28, and 30 through 33

 

Township 7 North, Range 63 West, 6th P.M.

Section 36 

 

8.     On June 14, 2011, Marathon, 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.

 

9.     Land testimony and exhibits submitted in support of the Application by Tricia Clarke, Land Professional for Marathon, showed that the Applicant has either fully or partially leased the mineral interests in each section of the Amended Application Lands, except for the four sections listed below in which Marathon has no mineral ownership:

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

Sections 5 and 6

 

Township 7 North, Range 61 West, 6th P.M.

Section 19

 

Township 7 North, Range 63 West, 6th P.M.

Section 36

 

The testimony further states that the Amended Application Lands are primarily private fee leases with a state lease covering Section 36, Township 7 North, Range 63 West, 6th P.M.

10.   Geologic testimony and exhibits submitted in support of the Application by Matthew Humphreys, Petroleum Geologist for Marathon, showed that the Niobrara Formation is consistent, continuous, and underlies the Amended Application Lands as a common source of supply with a regional dip of approximately 40 feet per mile to the west.  Total thickness of the Niobrara Formation under the Amended Application Lands ranges from 274 to 282 feet. 

11.   Engineering testimony and exhibits submitted in support of the Application by Tara Salinas, Reservoir Engineer for Marathon, showed that analysis of non-Marathon wells in the Niobrara Formation in analogous areas reveals attractive estimates of estimated ultimate recovery and original oil-in-place with drainage areas for horizontal wells ranging from 197 to 362 acres. Horizontal wells are far more productive than vertical wells.  Additional testimony indicated granting the Application will result in efficient and economic development of Amended Application Lands.   

 

12.   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 June 10, 2011, the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any additional conditions of approval are necessary for approving the Application.

 

13.   On June 17, 2011, Marathon, by its attorneys, requested that the following lands be withdrawn from the Application:

 

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

Sections 5 and 6

 

Township 7 North, Range 61 West, 6th P.M.

Section 19

 

Township 7 North, Range 63 West, 6th P.M.

Section 36

 

The below listed lands remain subject to the Application:


 

 

Township 7 North, Range 61 West, 6th P.M.

Section 30

 

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

Sections 24, 28, and 30 though 33

 

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

 

15.   Marathon agreed to be bound by oral order of the Commission. 

 

16.   Based on the facts stated in the verified amended 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 seven (7) approximate 640-acre drilling and spacing units for certain lands located in Township 7 North, Ranges 61 and 62 West, 6th P.M., and approve one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

                        NOW, THEREFORE IT IS ORDERED, that seven (7) approximate 640-acre drilling and spacing units are hereby approved for the below-described lands, and one horizontal well is approved within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

 

Township 7 North, Range 61 West, 6th P.M.

Section 30

 

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

Sections 24, 28, and 30 through 33

 

                        IT IS FURTHER ORDERED, that the treated interval of the wellbore for the permitted well to be no closer than 600 460 feet from the unit boundaries without exception being granted by the Director.

 

IT IS FURTHER ORDERED, that surface locations for authorized wells shall be consistent with Rule 318.A.

 

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    30th    day of June, 2011, as of June 27, 2011.

                        CORRECTED this 14th day of February, 2012, as of June 27, 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

June 30, 2011

February 14, 2012