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 WATTENBERD FIELD,
WELD COUNTY, COLORADO |
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CAUSE NO. 407
ORDER NO. 407-657
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REPORT OF THE COMMISSION
The Commission heard this matter on May 29, 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 4,
Township 7 North, Range 66 West, 6th P.M., and authorize drilling up
to four wells within the 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., 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 4,
Township 7 North, Range 66 West, 6th P.M. is subject to Rule 318A.
5.
On March 30, 2012, Marathon, 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-described lands (“Application
Lands”), and authorize drilling up to four wells within the unit, for the
production of oil, gas and associated hydrocarbons from the Niobrara Formation,
with the treated interval of any horizontal well to be no closer than 460 feet
from the boundaries of the unit, without exception being granted by the
Director:
Township 7 North, Range 66 West, 6th P.M.
Section 4:
All
6.
On May 15, 2012, 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.
7.
Land testimony and exhibits submitted in support of the Application by
Tricia Clarke, Land Professional for Marathon, showed the Applicant has fully
leased the mineral interests in each section of the Application Lands, that the
Application Lands are private fee leases, and that interested parties received
notice of the Application at least 30 days prior to the May 29, 2012 hearing.
8.
Geologic testimony and exhibits submitted in support of the Application
by Matthew Humphreys, Advanced Senior Geologist for Marathon, showed the
Niobrara Formation underlies most of the DJ Basin in eastern Colorado,
southeastern Wyoming, and western Nebraska.
An isopach map of the Niobrara Formation showed total thickness of the
Niobrara Formation ranges from 300 to 320 feet in the Application Lands. A type log for the Niobrara Formation
showed that it consists of two members, the Smoky Hill Chalk and the Fort Hayes
Limestone. A stratigraphic
cross-section of the Application Lands showed the Niobrara Formation to be
consistent, continuous, and underlying all the Application Lands as a common
source of supply.
9.
Engineering testimony and exhibits submitted in support of the
Application by Tara Watson, Reservoir Engineer for Marathon, showed analysis of
a number of wells within the Application Lands demonstrated a range estimated
ultimate recovery (“EUR”) values from 40 to 472 MBO; a range of original
oil-in-place (“OOIP”), from 794 to 9,446 MBO; and a drainage area ranging from
46 to 534-acres, with an average of 177-acres. The Silo field, north of the
Application Lands in southern Wyoming, is a major field producing from the
Niobrara Formation. EUR and
drainage estimates (which vary from 29 to 507-acres for horizontal wells) for
the Silo field were included in Applicant’s engineering analysis. Additional testimony indicated
granting the proposed spacing application will result in efficient and economic
development of Application Lands.
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.
Marathon
agreed to be bound by oral order of the Commission.
12.
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 4, Township 7 North, Range 66 West, 6th
P.M., and authorize drilling up to four 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 for the below-described lands, is hereby established, and up to
four wells within the unit, are hereby approved, for the production of oil, gas
and associated hydrocarbons from the Niobrara Formation, with the treated
interval of any horizontal well to be no closer than 460 feet from the
boundaries of the unit, without exception being granted by the Director:
Township 7 North, Range 66 West, 6th P.M.
Section 4:
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
4TH
day of June, 2012, as of May 29,
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
June 4, 2012