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. 407-584

REPORT OF THE COMMISSION

The Commission heard this matter on April 16, 2012, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, upon application for an order to establish an approximate 320-acre wellbore spacing unit for Section 2, Township 3 North, Range 64 West, 6th P.M., to accommodate the drilled Guttersen D02-75HN Well, and authorize a horizontal well within the wellbore spacing unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

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, 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.  Section 2, Township 3 North, Range 64 West, 6th P.M. is subject to this Order for the Codell Formation.

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, with the permitted well locations in accordance with the provisions of Order No. 407-1.  Section 2, Township 3 North, Range 64 West, 6th P.M. is subject to this Order for the Codell and Niobrara Formations.

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.  Section 2, Township 3 North, Range 64 West, 6th P.M. is subject to this Rule for the Codell and Niobrara Formations.

7.         On February 15, 2012, Noble, by its attorneys, filed with the Commission pursuant to § 34-60-116 C.R.S., a verified application (“Application”) for an order to establish an approximate 320-acre wellbore spacing unit for the below-described lands (“Application Lands”) to accommodate the drilled Guttersen D02-75HN Well (“Well”) (API No. 05-123-33326), and authorize a horizontal well within the wellbore spacing unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the treated interval of the permitted wellbore to be located no closer than 460 feet from the boundaries of the proposed wellbore spacing unit, and a surface location outside of a designated drilling window and greater than 50 feet from an existing well under Rules 318A.a.(3) and 318A.c.(2) pursuant to surface owner consent:

Township 3 North, Range 64 West, 6th P.M.
Section 2:        E½ W½, W½ E½

Applicant confirmed that it is not changing the established 80-acre drilling and spacing units for any existing vertical Codell or Niobrara Formation wells.  Applicant further confirmed that it is not changing the established distribution of proceeds for any existing vertical Codell or Niobrara Formation wells subject to Order No. 407-87.  Proceeds will be allocated and distributed from the Well on an approximate 320-acre basis.

8.         On April 2, 2012, Noble, 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 Chuck A. Snure, Land Manager for Noble, stated Noble owns a leasehold in the Application Lands and has drilled one horizontal well which confirmed the presence of the Niobrara Formation underlying the Application Lands.  Testimony concluded that Noble is not changing the distribution of proceeds from any existing Niobrara Formation wells.

10.       Geologic testimony and exhibits submitted in support of the Application by Ron Pritchett, Senior Geologist for Noble, including an analysis of cross-sections from Codell and Niobrara Formation type wells located within the Application Lands, indicated the Codell and Niobrara Formations underlie, and are generally of uniform thickness.

11.       Engineering testimony and exhibits submitted in support of the Application by Ryan Sullivan, Engineering Team Lead for Noble, indicated the use of horizontal and vertical wells in the Application Lands is necessary to increase the recovery of hydrocarbons from the reservoir. Testimony further indicated that use of vertical and horizontal wells would increase the recovery factor to 5.2%, with an Estimated Ultimate Recovery of 707 MBOE.

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 hydrocarbons, 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 to establish an approximate 320-acre wellbore spacing unit for Section 2, Township 3 North, Range 64 West, 6ht P.M., to accommodate the drilled Guttersen D02-75HN Well, and authorize a horizontal well within the wellbore spacing unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

ORDER

NOW, THEREFORE IT IS ORDERED, that an approximate 320-acre wellbore spacing unit, is hereby established, for the below-described lands to accommodate the drilled Guttersen D02-75HN Well (“Well”) (API No. 05-123-33326), and a horizontal well, is hereby approved, within the wellbore spacing unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the treated interval of the permitted wellbore to be located no closer than 460 feet from the boundaries of the proposed wellbore spacing unit, and a surface location outside of a designated drilling window and greater than 50 feet from an existing well under Rules 318A.a.(3) and 318A.c.(2) pursuant to surface owner consent is hereby approved:

Township 3 North, Range 64 West, 6th P.M.
Section 2:        E½ W½, W½ E½

IT IS FURTHER ORDERED, that established 80-acre drilling and spacing units for any existing vertical Codell or Niobrara Formation wells remain unchanged.  Proceeds from any existing vertical Codell or Niobrara Formation wells subject to Order No. 407-87 shall continue to be allocated and distributed from the Well on an approximate 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   18th  day of April, 2012, as of April 16, 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
April 18, 2012