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 9 AND 16, 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-114
ORDER NO.
421-26 |
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 maintain two
approximate 640-acre drilling and spacing units established by Order No. 421-3
for Sections 9 and 16, Township 11 North, Range 62 West, 6th P.M. for
the Garden Creek #09-16H Well, and establish an approximate 1,280-acre stand-up
exploratory drilling and spacing unit for Sections 9 and 16, 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 9 and 16, Township 11 North, Range 62 West, 6th P.M.
are subject to this Order for the Niobrara Formation.
5.
On September 17,
2012 (amended October 24, 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 maintain two approximate 640-acre drilling and
spacing units established by Order No. 421-3 for the below-described lands
(“Application Lands”) for the Garden Creek #09-16H Well (API No. 05-123-31191)
(“Well”), 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 Amended 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 40-50 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, 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 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 maintain two approximate 640-acre drilling and spacing
units established by Order No. 421-3 for Sections 9 and 16, Township 11 North,
Range 62 West, 6th P.M. for the Garden Creek #09-16H Well, and
establish an approximate 1,280-acre stand-up exploratory drilling and spacing
unit for Sections 9 and 16, 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 9 and 16, Township 11
North, Range 62 West, 6th P.M., are hereby maintained for the Garden
Creek #09-16H Well, 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, that Order No. 421-3 is unaffected by this Order.
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 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