BEFORE THE OIL AND GAS CONSERVATION
COMMISSION OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF EOG RESOURCES, INC., FOR AN ORDER
ESTABLISHING AN APPROXIMATE 1,300-ACRE EXPLORATORY DRILLING AND SPACING UNIT FOR
SECTIONS 13, 24 AND 25, TOWNSHIP 12 NORTH, RANGE 64 WEST, 6TH P.M.,
FOR HORIZONTAL AND VERTICAL WELL DEVELOPMENT, AND WELL LOCATION RULES FOR THE
NIOBRARA FORMATION, HEREFORD FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 421
DOCKET NO. 1211-SP-108
ORDER NO.
421-20 |
REPORT OF THE COMMISSION
The Commission heard this matter on January 7, 2013, at the
Sheraton Denver Downtown Hotel, 1550 Court Place,
Denver, Colorado, upon application for an order to vacate the drilling
and spacing unit established by Order No. 421-7 for certain portions of Sections
13 and 24, Township 12 North, Range 64 West, 6th P.M., and the
approximate 640-acre drilling and spacing unit established by Order No. 421-3
for Section 25, Township 12 North, Range 64 West, 6th P.M., for the
production of oil, gas and associated hydrocarbons from the Niobrara Formation;
and establish an approximate 1300-acre stand-up exploratory drilling and spacing
unit consisting of Sections 13, 24, and 25, Township 12 North, Range 64 West 6th
P.M., and approve up to ten wells within the unit, for the production of oil,
gas and associated hydrocarbons from the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1.
EOG Resources,
Inc. (“EOG” or “Applicant’),
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 October 21,
2010, the Commission entered Order No. 421-3 which, among other things,
established 83 approximate 640-acre drilling and spacing units, and approved one
horizontal well within each unit, for the production of oil, gas and associated
hydrocarbons from the Niobrara Formation.
Sections 24 and 25, Township 12 North, Range 64 West, 6th P.M.
are subject to this Order for the Niobrara Formation.
5.
On February 22,
2011, the Commission entered Order No. 421-7 which, among other things, combined
Lots 1, 2, 3, and 4 (approximately 18.98 acres) of Section 13, Township 12
North, Range 64 West, 6th P.M., with Section 24, Township 12 North,
Range 64 West, 6th P.M. (approximately 640 acres), to create one
drilling and spacing unit, and approved one horizontal well within the unit, for
the production of oil, gas and associated hydrocarbons from the Niobrara
Formation. Sections 13 and 24, Township
12 North, Range 64 West, 6th P.M. are subject to this Order for the
Niobrara Formation.
6.
On September 17,
2012, EOG, by its attorneys, filed with the Commission pursuant to § 34-60-116
C.R.S., a verified application
(“Application”) for an order to vacate the drilling and spacing unit established
by Order No. 421-7 for certain portions of Section 13 and Section 24, Township
12 North, Range 64 West, 6th P.M., and the approximate 640-acre
drilling and spacing unit established by Order No. 421-3 for Section 25,
Township 12 North, Range 64 West, 6th P.M., for the production of
oil, gas and associated hydrocarbons from the Niobrara Formation; and establish
an approximate 1,300-acre stand-up exploratory drilling and spacing unit for the
below-described lands (“Application Lands”), for horizontal and vertical well
development, for the production of oil, gas and associated hydrocarbons from the
Niobrara Formation, and that any wells drilled under the Application should be
drilled from a new, common or existing well pad, with not more than one well pad
per quarter quarter section, with the bottomhole locations not less than 600
feet from the boundary of the proposed drilling unit and not less than 460 feet
from any other well or treated interval of a well producing from the Niobrara
Formation, without exception being granted by the Director:
Township
12 North, Range 64 West, 6th P.M.
Section 13: |
Lots 1, 2, 3, and 4 (that portion of the section
within Colorado - approximately 18.980-acres) |
Section 24: |
All |
Section 25: |
All |
7.
On November 9,
2012, EOG, by its attorneys,
filed with the Commission a written request to approve the Application based on
its 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 Jason McLaren, Landman for
EOG, showed that EOG holds a leasehold interest in the Application Lands.
9.
Geologic testimony
and exhibits submitted in support of the Application by John H. Melby, Petroleum
Geologist for EOG, showed the regional dip for the Niobrara Formation underlying
the Application Lands is approximately 30-40 feet per mile to the west-southwest
across the proposed spaced area and that the Niobrara Formation exists under all
of the Application Lands. Additional
testimony showed that the total thickness of the Niobrara Formation under the
Application Lands is 265 to 275 feet.
10.
Engineering
testimony and exhibits submitted in support of the Application by Osman G.
Apaydin, Reservoir Engineer for EOG, showed analogous EOG horizontal wells in
640-acre drilling and spacing units have a recovery factor of 5%. Additional testimony showed that the
average drainage area for a short lateral well is 99 acres; however, the average
drainage area for a long lateral well is 168 acres, resulting in an improvement
of 70%. The testimony concluded that
by maximizing horizontal well length, the longer lateral well will have the
increased possibility of crossing fault/fracture-like features which will lead
to substantially larger recovery of hydrocarbons.
11.
The
above-referenced testimony and exhibits show that the granting of the
Application will allow more efficient reservoir drainage, and will prevent
waste, will assure a greater ultimate recovery of hydrocarbons and will not
violate correlative rights.
12.
EOG has agreed to be bound by the oral order of the Commission.
13.
Based on the facts stated in the Application, having received no
protests, and based on the Hearing Officer review under Rule 511, the Commission
should enter an order to vacate the approximate 640-acre drilling and spacing
units established by Order No. 421-7 for Sections 13 and 24 and the approximate
640-acre drilling and spacing unit established by Order No. 421-3 for Section
25, Township 12 North, Range 64 West, 6th P.M., and establish an
approximate 1300-acre stand-up exploratory drilling and spacing unit for
Sections 13, 24, and 25, Township 12 North, Range 64 West, 6th P.M.,
and approve up to ten wells within the unit, for the production of oil, gas and
associated hydrocarbons from the Niobrara Formation.
ORDER
NOW, THEREFORE, IT IS ORDERED, that the drilling and spacing unit
established by Order No. 421-7 for certain portions of Sections 13 and 24,
Township 12 North, Range 64 West, 6th P.M., and the approximate
640-acre drilling and spacing unit established by Order No. 421-3 for Sections
24 and 25, Township 12 North, Range 64 West, 6th P.M., are hereby
vacated, and an approximate 1300-acre stand-up exploratory drilling and spacing
unit for the below-described lands, is hereby established, and up to ten wells
within the unit, are hereby approved, for
the production of oil, gas and associated hydrocarbons from the Niobrara
Formation, with the bottomhole locations not less than 600 feet from the boundary of the
proposed drilling unit and not less than 460 feet from any other well or treated
interval of a well producing from the Niobrara Formation, without exception
being granted by the Director:
Township 12 North, Range 64 West,
6th P.M.
Section 13: |
Lots 1, 2, 3, and 4 (that portion of
the section within Colorado - approximately 18.980-acres) |
Section 24: |
All |
Section 25: |
All |
IT IS FURTHER ORDERED, the provisions contained
in the above order, shall become effective forthwith.
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 thirty (30) days after the date of 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