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 1,280-ACRE EXPLORATORY DRILLING AND SPACING UNIT FOR
SECTIONS 10 AND 15, TOWNSHIP 11 NORTH, RANGE 62 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-113
ORDER NO.
421-25 |
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 two approximate
640-acre drilling and spacing units established by Order No. 421-3 for Sections
10 and 15, Township 11 North, Range 62 West, 6th P.M., and establish
an approximate 1280-acre stand-up exploratory drilling and spacing unit for
Sections 10 and 15, Township 11 North, Range 62 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 10 and 15, Township 11 North, Range 62 West, 6th P.M.
are subject to this Order for the Niobrara Formation.
5.
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 two approximate 640-acre drilling and
spacing units established by Order No. 421-3 for the below-described lands
(“Application Lands”), and establish an approximate 1,280-acre stand-up
exploratory drilling and spacing unit consisting of the 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 11 North, Range 62 West, 6th
P.M.
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6.
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.
7.
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.
8.
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 40 feet per mile to the west 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 270 to 275 feet.
9.
Engineering
testimony and exhibits submitted in support of the Application by Osman G.
Apaydin, Reservoir Engineer for EOG, 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 but 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.
10.
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.
11.
EOG has agreed to be bound by the oral order of the Commission.
12.
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 two approximate 640-acre drilling and spacing
units established by Order No. 421-3 for Sections 10 and 15, Township 11 North,
Range 62 West, 6th P.M., and establish an approximate 1280-acre
stand-up exploratory drilling and spacing unit for Sections 10 and 15, Township
11 North, Range 62 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 two approximate 640-acre drilling and
spacing units established by Order No. 421-3 for Sections 10 and 15, Township 11
North, Range 62 West, 6th P.M. are hereby vacated, and one
approximate 1280-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 11 North, Range 62 West, 6th P.M.
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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