BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

REPORT OF THE COMMISSION

The Commission heard this matter on October 1, 2012, in the Routt County Justice Center, 1955 Shield Drive, Steamboat Springs, Colorado, upon application for an order to establish an approximate 640-acre wellbore spacing unit for Sections 28 and 29, Township 6 North, Range 62 West, 6^th P.M., and authorize one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation.

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 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.  Sections 28 and 29, Township 6 North, Range 62 West, 6^th P.M. are subject to this Rule for the Codell-Niobrara Formation.

5.         On May 10, 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 640-acre wellbore spacing unit for the below-described lands (“Application Lands”), and approve one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, with the treated interval of the wellbore to be located no closer than 460 feet from the boundary of the unit, without exception being granted by the Director:

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

                        Section 28:      N½

                        Section 29:      N½

6.         On June 26, 2012, Noble requested, and Commission Staff granted, a continuance to the August 20, 2012 hearing.

7.         On August 1, 2012, Noble requested, and Commission Staff granted, a continuance to the October 1, 2012 hearing.

8.         On September 18, 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 Joseph H. Lorenzo, Senior Land Manager for Noble, showed that Noble has a 100% leasehold interest in the Application Lands.

10.       Engineering testimony and exhibits submitted in support of the Application by Caleb Ring, Engineer for Noble, showed the volumetric calculation showing the ultimate recovery for the existing vertical wells to be approximately 0.2%, using an average of .72 BCFE from each vertical well. This is based on a calculated original gas-in place of 325.6 BCFE.  Further testimony showed that horizontal wells would increase the recovery factor to approximately 7.4% and that the additional reserves would not be fully recovered without the application of the horizontal well technology, and thus the proposed wells will more effectively drain the reservoir.  

11.       Geologic testimony and exhibits submitted in support of the Application by Larry Amateis, Senior Geologist for Noble, showed the Niobrara Formation is both a hydrocarbon source rock and a reservoir.  The testimony showed a regional dip of approximately 12 feet per mile to the West.  Further testimony included an isopach map of the Niobrara Formation which showed total thickness ranged from approximately 270 to 380 feet under the Application Lands. 

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 Hearings Officer review of the Application under Rule 511., the Commission should enter an order to establish an approximate 640-acre wellbore spacing unit for Sections 28 and 29, Township 6 North, Range 62 West, 6^th P.M., and authorize one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation.

ORDER

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

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

                        Section 28:      N½

                        Section 29:      N½

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                         day of October, 2012, as of October 1, 2012.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary