BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
|
IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE NIOBRARA FORMATION, HEREFORD FIELD, WELD COUNTY, COLORADO |
) ) ) ) ) |
CAUSE NO. 421
DOCKET NO. 1412-SP-2221
ORDER NO. 421-53 |
REPORT OF THE COMMISSION
The Commission heard this matter on December 15, 2014 at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, CO, upon application for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 421-3 for Section 23, Township 12 North, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate Order No. 421-5 in its entirety; and 3) establish an approximate 1302.067-acre drilling and spacing unit for Sections 14, 23, 26, Township 12 North, Range 64 West, 6th P.M., and approve up to two horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1. Anadarko E&P Onshore LLC (“Anadarko” 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. Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that, on unspaced lands, 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. Sections 14, 23, 26, Township 12 North, Range 64 West, 6th P.M. are subject to this Rule for the Niobrara Formation.
5. On October 22, 2010, the Commission entered Order No. 421-3 which established 83 approximate 640-acre drilling and spacing units for certain lands, including Section 23, Township 12 North, Range 64 West, 6th P.M., and approving one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
6. On February 22, 2011, the Commission entered Order No. 421-5 which added Section 14 (Lots 1, 2, 3, and 4), Township 12 North, Range 64 West, 6th P.M. into an approximate 640-acre drilling and spacing unit previously established for Section 23, Township 12 North, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
7. On October 16, 2014, Anadarko, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to establish an approximate 1302.07-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 2 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:
Township 12 North, Range 64 West, 6th P.M.
Section 14: Lots 1-4 (approx. 22.07 acres)
Section 23: All
Section 26: All
8. On November 24, 2014, Anadarko, 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.
9. On December 9, 2014, Anadarko, by its attorneys, and the Bureau of Land Management (“BLM”) agreed that the Application Lands contain federal leased and/or unleased minerals. As such, Anadarko agrees to submit a Communitization Agreement (“CA”) to the BLM for any existing wells within 60 days of the entry of this order. Anadarko also agrees to submit a CA to the BLM within 90 days from the date of first production (as defined in the Commission Rules) from the initial well drilled within the exploratory drilling unit (or drilling and spacing unit).
10. Land testimony and exhibits submitted in support of the Application by Jason Rayburn, Landman for Anadarko, showed that Anadarko holds oil and gas leasehold interests and has a right to drill in the Application Lands.
11. Geologic testimony and exhibits submitted in support of the Application by Tom Berkman, Sr. Project Geological Advisor for Anadarko, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 135 to 145 feet thick, and is generally of uniform thickness throughout the Application Lands.
12. Engineering testimony and exhibits submitted in support of the Application by Emily Boecking, Senior Reservoir Engineer for Anadarko, showed that the drainage area for analog horizontal Formation wells are estimated at 155 acres, and an approximate 1302.07-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Niobrara Formation.
13. 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.
14. Anadarko agreed to be bound by oral order of the Commission.
15. 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) vacate an approximate 640-acre drilling and spacing unit established by Order No. 421-3 for Section 23, Township 12 North, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate Order No. 421-5 in its entirety; and 3) establish an approximate 1302.067-acre drilling and spacing unit for Sections 14 (Lots 1-4 that portion lying within the State of Colorado), 23, 26, Township 12 North, Range 64 West, 6th P.M., and one horizontal well within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 640-acre drilling and spacing unit established by Order No. 421-3, for Section 23, Township 12 North, Range 64 West, 6th P.M. is hereby vacated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation;
2. Order No. 421-5 is hereby vacated in its entirety.
3. An approximate 1302.07-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 2 horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:
Township 12 North, Range 64 West, 6th P.M.
Section 14: Lots 1-4 (approx. 22.07 acres)
Section 23: All
Section 26: All
4. The productive interval of the wellbore will be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director.
5. Anadarko agrees to submit a Communitization Agreement (“CA”) to the BLM for any existing wells within 60 days of the entry of this order. Anadarko also agrees to submit a CA to the BLM within 90 days from the date of first production (as defined in the Commission Rules) from the initial well drilled within the drilling and spacing unit.
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 35 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 8th day of January, 2015, as of December 15, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Jill Dorancy, Acting Secretary