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

REPORT OF THE COMMISSION

            The Commission heard this matter on June 17, 2013, at the Two Rivers Convention Center, 159 Main Street, Grand Junction, Colorado, upon application for an order to: 1) establish an approximate 640-acre drilling and spacing unit for Section 27, Township 4 North, Range 62 West, 6^th P.M., and approve up to 16 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2)  establish an approximate 640-acre drilling and spacing unit for Section 27, Township 4 North, Range 62 West, 6^th P.M., and approve up to four horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell Formation.

FINDINGS

The Commission finds as follows:

1.         Bill Barrett Corporation (“BBC” 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.         Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply.  Section 27, Township 4 North, Range 62 West, 6^th P.M. is subject to this Rule for the Codell and Niobrara Formations.

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, among other things, 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, among other things, to address drilling of horizontal wells.  Section 27, Township 4 North, Range 62 West, 6^th P.M. is subject to Rule 318A for the Codell and Niobrara Formations.

            6.         On March 28, 2013, BBC, by its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an order to: 1) establish an approximate 640-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to 16 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation;  2)  establish an approximate 640-acre drilling and spacing unit for the Application Lands, and approve up to four horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell Formation; and 3) for both units, provide the treated interval of the wellbore to be located no closer than 460 feet from the unit boundaries and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

Township 4 North, Range 62 West, 6^th P.M.

Section 27:      All

Applicant stated the proposed wells shall be located on no more than two multi-well pads within the drilling and spacing unit.

7.         On June 4, 2013, BBC, 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 Hal Writer, Senior Landman for BBC, showed BBC owns substantial leasehold interests in the Application Lands.

9.         Geologic testimony and exhibits submitted in support of the Application by Jason F. Brand, Petroleum Geologist for BBC, showed the Niobrara Formation underlies the entirety of the Application Lands and ranges from approximately 265 to 270 feet thick, and the Codell Formation also underlies the entirety of the Application Lands.  Further testimony showed the Niobrara Formation is a sequence of chalks, marls and limestones and is a common source of supply.

10.       Engineering testimony and exhibits submitted in support of the Application by Mark Stouffer, Reservoir Engineering Advisor for BBC, showed the drainage area for nearby horizontal type wells averaged 39-acres for the Niobrara and 101-acres for the Codell Formations.  Testimony concluded the 640-acre unit would accommodate up to sixteen horizontal Niobrara wells and up to four horizontal Codell wells, while protecting correlative rights of adjacent mineral owners.

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.       BBC 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: 1) establish an approximate 640-acre drilling and spacing unit for Section 27, Township 4 North, Range 62 West, 6^th P.M., and approve up to 16 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2)  establish an approximate 640-acre drilling and spacing unit for Section 27, Township 4 North, Range 62 West, 6^th P.M., and approve up to four horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell Formation.

ORDER

IT IS HEREBY ORDERED:

1.         An approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established, and up to 16 horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

Township 4 North, Range 62 West, 6^th P.M.

Section 27:      All

2.         An approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established, and up to four horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell Formation:

Township 4 North, Range 62 West, 6^th P.M.

Section 27:      All

3.         For both units, the treated interval of the wellbore shall be located no closer than 460 feet from the unit boundaries and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director.

IT IS FURTHER ORDERED:

1.         The provisions contained in the above order shall become effective immediately.

2.         The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

3.         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.

4.         An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.

ENTERED THIS  8^th  day of July, 2013, as of June 17, 2013.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary