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

REPORT OF THE COMMISSION

                        The Commission heard this cause on February 22, 2011, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, on an application for an order to add certain lands in Section 14, Township 12 North, Range 64 West, 6^th P.M. into the established 640-acre drilling and spacing unit, consisting of Section 23, Township 12 North, Range 64 West, 6^th P.M., and continue to allow one horizontal well in the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.  Anadarko Petroleum Corporation (“Anadarko”), 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. Lots 1, 2, 3, and 4 of Section 14, Township 12 North, Range 64 West, 6^th P.M. is subject to this Rule for the Niobrara Formation.

5.  On October 22, 2010, the Commission entered Order No. 421-3, which among other things, established approximate 640-acre drilling and spacing units for certain lands, including Section 23, Township 12 North, Range 64 West, 6^th P.M., and authorized the drilling of no more than one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

6.  On December 15, 2010, Anadarko, by its attorney, filed with the Commission a verified application (“Application”) for an order to add the below-listed lands (“Application Lands”) into the approximate 640-acre drilling and spacing unit previously established for Section 23, Township 12 North, Range 64 West, 6^th P.M., and continue to authorize the drilling of no more than one horizontal well within said unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the surface location for any permitted well to be located anywhere upon said unit, provided that the horizontal leg into the Niobrara Formation is no closer than 600 feet to the outside boundary of said unit and the terminus of the horizontal leg shall not be any closer than 600 feet to the outside boundary of the drilling and spacing unit without exception being granted by the Director of the Commission:

Township 12 North, Range 64 West, 6^th P.M.

7.    On January 31, 2011, Anadarko, by its attorney, 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.    On February 4, 2011, an Amended Notice of Hearing was served on the interested parties, which allowed any protests/interventions to be filed by February 16, 2011.

9.    Testimony and exhibits submitted in support of the Application by Patrick McGraw, Landman for Anadarko, showed that the Application Lands are located directly north of the drilling unit described as Section 23 in Township 12 North, Range 64 West and that such lands are located along the Colorado/Wyoming border.  The technical evidence supporting the initial spacing of the Section 23 lands was introduced in Order No. 421-3, and is incorporated by reference through administrative notice pursuant to Rule 519.c.  Because the Application Lands are located on the border they are not large enough to support horizontal drilling and thus should be incorporated into the drilling unit to the south. 

10.  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 gas, and will not violate correlative rights.

11. Anadarko agreed to be bound by oral order of the Commission. 

12.  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 add certain lands in Section 14, Township 12 North, Range 64 West, 6^th P.M. into the established 640-acre drilling and spacing unit, consisting of Section 23, Township 12 North, Range 64 West, 6^th P.M., and continue to allow one horizontal well in the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

ORDER

NOW, THEREFORE IT IS ORDERED, that the approximate 640-acre drilling and spacing unit previously established for Section 23, Township 12 North, Range 64 West, 6^th P.M. is hereby increased by combining the below-listed lands into a newly established drilling and spacing unit, with continuing approval of no more than one horizontal well within said unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the surface location for any permitted well to be located anywhere upon said unit, provided that the horizontal leg into the Niobrara Formation is no closer than 600 feet to the outside boundary of said unit and the terminus of the horizontal leg shall not be any closer than 600 feet to the outside boundary of the drilling and spacing unit without exception being granted by the Director of the Commission:

Township 12 North, Range 64 West, 6^th P.M.

                        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 thirty (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  8^th  day of March, 2011, as of February 22, 2011.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________         

                                                                                    Robert  A. Willis, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

March 8, 2011