BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF NOBLE ENERGY, INC, FOR AN ORDER
VACATING ORDER NO. 407-689, AND POOLING ALL INTERESTS IN FOUR APPROXIMATE 160 TO
320-ACRE DESIGNATED WELLBORE SPACING UNITS LOCATED IN SECTON 14, TOWNSHIP 7
NORTH, RANGE 64 WEST, 6TH P.M., FOR THE NIOBRARA FORMATION,
WATTENBERG FIELD, WELD COUNTY, COLORADO |
)
)
)
)
)
)
)
) |
CAUSE NO. 407
DOCKET NO. 1301-UP-25
ORDER NO. 407-748
|
REPORT OF THE COMMISSION
The Commission heard this matter on January 7, 2013, at the offices of the
Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver,
Colorado, upon application for an order to:
1) vacate Order No. 407-689; and 2) pool all interests in four
approximate 160-acre to 320-acre designated wellbore spacing units established
for Section 14, Township 7 North, Range 64
West, 6th P.M., to accommodate the
Furrow Federal AB14-62HN Well, Furrow
Federal AB14-63HN Well, Furrow Federal AB14-64HN Well and the Furrow Federal
AB14-65HN Well, for the development and operation of the 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 August 30, 2012, the Commission
entered Order No. 407-689 which, among other things, pooled all interests in
four approximate 320-acre designated wellbore spacing units established for the
development and operation of the Niobrara Formation. Section 14, Township 7 North, Range
64 West, 6th P.M. is subject to this Order for the Niobrara
Formation.
5.
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 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 to, among other things, address
drilling of horizontal wells.
Section 14, Township 7 North, Range 64 West, 6th P.M. is subject to
this Order for the Niobrara Formation.
6.
On November 2, 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: 1) vacate Order No. 407-689;
and 2) pool all interests in four approximate 160-acre to 320-acre designated
wellbore spacing units established for the below-described lands (“Application
Lands”), for the development and operation of the Niobrara Formation, effective
as of the earlier of the date of this Application, or the date that any of the
costs specified in C.R.S. §34-60-116(7)(b)(II) were first incurred for the
drilling of each respective well: the Furrow
Federal AB14-62HN Well, Furrow Federal AB14-63HN Well, Furrow Federal AB14-64HN
Well and the Furrow Federal AB14-65HN Well (“Wells”) on the following lands:
Township 7 North, Range 64 West, 6th P.M.
Section 14:
S½ S½
(WSU #1 - Furrow Federal AB14-62HN – 160-acres)
Section 14: S½
(WSU #2 - Furrow Federal AB14-63HN – 320 acres)
Section 14:
N½ S½
(WSU #3 - Furrow Federal AB14-64HN – 160-acres)
Section 14:
S½ N½, N½ S½
(WSU #4 - Furrow Federal AB14-65HN – 320-acres)
7.
On December 19, 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.
8.
Land testimony and exhibits submitted in support of the Application by
Joseph H. Lorenzo, Senior Land Manager for Noble, showed that all nonconsenting
interest owners were notified of the Application and received and Authority for
Expenditure ("AFE") and offer to participate in the Well. Further testimony concluded that the
AFE sent by the Applicant to the interest owners was a fair and reasonable
estimate of the costs of the proposed drilling operation and was received at
least 30 days prior to the January 7, 2013 hearing date.
9.
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.
10.
Noble agreed to be bound by oral order of the Commission.
11.
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:
1) vacate Order No. 407-689; and 2)
pool all interests in four approximate 160-acre to 320-acre designated wellbore
spacing units established for Section 14,
Township 7 North, Range 64 West, 6th P.M., to accommodate the
Furrow Federal AB14-62HN Well, Furrow
Federal AB14-63HN Well, Furrow Federal AB14-64HN Well and the Furrow Federal
AB14-65HN Well, for the development and operation of the Niobrara
Formation.
ORDER
NOW, THEREFORE IT IS
ORDERED, that Order No. 407-689, is hereby
vacated.
IT IS
FURTHER ORDERED, that:
1.
Pursuant to the provisions of §34-60-116, C.R.S., as amended, of the Oil
and Gas Conservation Act, all interests in four approximate 160-acre to 320-acre
designated wellbore spacing units established for the below-described lands, are
hereby pooled, for the development and operation of the Niobrara Formation,
effective as of the earlier of the date of the Application, or the date that any
of the costs specified in C.R.S. §34-60-116(7)(b)(II) are first incurred for the
drilling of each respective well: the Furrow
Federal AB14-62HN Well, Furrow Federal AB14-63HN Well, Furrow Federal AB14-64HN
Well and the Furrow Federal AB14-65HN Well:
Township 7 North, Range 64 West, 6th P.M.
Section 14:
S½ S½
(WSU #1 - Furrow Federal AB14-62HN – 160-acres)
Section 14: S½
(WSU #2 - Furrow Federal AB14-63HN – 320 acres)
Section 14:
N½ S½
(WSU #3 - Furrow Federal AB14-64HN – 160-acres)
Section 14:
S½ N½, N½ S½
(WSU #4 - Furrow Federal AB14-65HN – 320-acres)
2.
The production obtained from the wellbore spacing unit shall be allocated
to each owner in the unit on the basis of the proportion that the number of
acres in such tract bears to the total number of mineral acres within the
wellbore spacing unit; each owner of an interest in the wellbore spacing unit
shall be entitled to receive its share of the production of the Well located on
the wellbore spacing unit applicable to its interest in the wellbore spacing
unit.
3.
The nonconsenting leased (working interest) owners must reimburse the
consenting working interest owners for their share of the costs and risks of
drilling and operating the Well (including penalties as provided by
§34-60-116(7)(b), C.R.S.) out of production from the wellbore spacing unit
representing the cost-bearing interests of the nonconsenting working interest
owners as provided by §34-60-116(7)(a), C.R.S.
4.
Any unleased owners are hereby deemed to have elected not to participate
and shall therefore be deemed to be nonconsenting as to the Well and be subject
to the penalties as provided for by §34-60-116 (7), C.R.S.
5.
Each nonconsenting unleased owner within the wellbore spacing unit shall
be treated as the owner of the landowner's royalty to the extent of 12.5% of its
record title interest, whatever that interest may be, until such time as the
consenting owners recover, only out of each nonconsenting owner's proportionate
87.5% share of production, the costs specified in §34-60-116(7)(b), C.R.S. as
amended. After recovery of such
costs, each unleased nonconsenting mineral owner shall then own its
proportionate 8/8ths share of the Well, surface facilities and production, and
then be liable for its proportionate share of further costs incurred in
connection with the Well as if it had originally agreed to the drilling.
6.
The operator of the well drilled on the above-described wellbore spacing
unit shall furnish the nonconsenting owners with a monthly statement of all
costs incurred, together with the quantity of oil and gas produced, and the
amount of proceeds realized from the sale of production during the preceding
month.
7.
Nothing in this order is intended to conflict with §34-60-116, C.R.S., as
amended. Any conflict that may arise
shall be resolved in favor of the statute.
IT IS FURTHER ORDERED, that the wellbore spacing unit described above, shall be
considered a drilling and spacing unit established by the Commission for
purposes of Rule 530.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 _____ day of January, 2013, as of January 7, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary