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. 407-660
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REPORT OF THE COMMISSION
The Commission heard this matter on July 9, 2012, in Suite 801, The Chancery
Building, 1120 Lincoln Street, Denver, Colorado, upon application for an order
to authorize up to four wells within an established 640-acre drilling and
spacing unit for Section 28, Township 7 North, Range 62 West, 6th
P.M., 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 June 27, 2011, the Commission entered Order No. 407-559 which, among
other things, established seven approximate 640-acre drilling and spacing units
and authorized one horizontal well within each unit, for the production of oil,
gas and associated hydrocarbons from the Niobrara Formation, and that the
treated interval of the wellbore for the permitted well to be no closer than 460
feet from the unit boundaries, and surface locations for wells are consistent
with Rule 318A. Section 28, Township
7 North, Range 62 West, 6th P.M. is subject to this Order for the
Niobrara Formation.
5.
On April 27, 1988, 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 Cretaceous
Age Formations from the base of the Dakota Formation to the surface. Rule 318A.
supersedes all prior Commission drilling and spacing orders affecting well
location and density requirements of Greater Wattenberg Area wells. 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. On August 8, 2011, Rule 318A was
again amended, among other things, to address drilling of horizontal wells.
Section 28, Township 7 North, Range 62 West, 6th P.M. is subject to
this Order for the Niobrara Formation.
6.
On May 10, 2012, Marathon, by its attorneys, filed with the Commission
pursuant to § 34-60-116 C.R.S., a verified application (“Application”) for an
order to authorize up to four horizontal wells within an approximate 640-acre
drilling and spacing unit for the below-described lands (“Application Lands”),
for the production of oil, gas and associated hydrocarbons from the Niobrara
Formation, with the treated interval of the wellbore to be no closer than 460
feet from the unit boundaries, and surface locations consistent with Rule 318A,
without exception being granted by the Director:
Township 7 North, Range 62 West, 6th P.M.
Section 28: All
7.
On June 27, 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.
8.
Land testimony and exhibits submitted in support of the Application by
Tricia Clarke, Land Professional for Marathon, showed that 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 the interested
parties received notice of the Application.
9.
Geologic testimony and exhibits submitted in support of the Application
by Amy Ondrus, Advanced Geologist for Marathon, showed that the Niobrara
Formation underlies most of the DJ Basin in eastern Colorado, southeastern
Wyoming, and western Nebraska and is composed of chalks, marls and limestones. An isopach map of the interval from
the top of the Niobrara Formation to the top of the Codell Formation showed a
total thickness of the Niobrara Formation ranges from 210 feet to 298 feet
within the Application Lands.
A type log of the Niobrara Formation showed it consists of two members, the
Smoky Hill Chalk and the Ft. Hays Limestone, and the structural dip is
approximately 40 feet per mile to the west.
A stratigraphic cross-section showed the Niobrara Formation to be
consistent, continuous, and underlying all the Application Lands.
10.
Engineering testimony and exhibits submitted in support of the Application by,
Tara Watson, Reservoir Engineer for Marathon, showed type wells within the
Application Lands demonstrated a range of 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 the
Application is economically viable.
11. 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.
12.
Marathon
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 authorize up to four wells within
an established 640-acre drilling and spacing unit for Section 28, Township 7
North, Range 62 West, 6th P.M., for the production of oil, gas and
associated hydrocarbons from the Niobrara Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that up to four wells within an established
640-acre drilling and spacing unit, are hereby approved, for the below-described
lands, for the production of oil, gas and associated hydrocarbons from the
Niobrara Formation, with the treated interval of the wellbore to be no closer
than 460 feet from the unit boundaries, and surface locations consistent with
Rule 318A, without exception being granted by the Director:
Township 8 North, Range 64 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
11th
day of July, 2012, as of July 9,
2012.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
July 11, 2012