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 IN THE HEREFORD FIELD, WELD COUNTY, COLORADO

)

)

)

)

CAUSE NO. 421

 

ORDER NO. 421-9

 

 

REPORT OF COMMISSION

 

                        This cause came on for hearing before the Commission on June 27, 2011, Elbert County Fairgrounds, Ag Building, 95 Ute Avenue, Kiowa, Colorado, for an order to amend Order No. 421-4 to:  (1) vacate the vacation of the approximate 640-acre drilling and spacing units for Sections 9, 10, 14, 15, and 16, Township 11 North, Range 63 West, 6th P.M. for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; (2) confirm the approval of one horizontal well in each of the established "rolling" laydown 1,280-acre drilling and spacing units for said lands, in addition to the single existing wells in each of the 640-acre units, for a total of three wellbores in the two sections of Unit #1, and a total of four wellbores in the two sections of Units #2 and Unit #3, including the wellbores of the 640-acre units, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and (3) recognize that due to overlapping 1,280-acre drilling and spacing units, there will be portions of up to three horizontal wellbores within said Section 15, 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”), 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.    On February 22, 2010, the Commission issued Order No. 421-1, which among other things, established approximate 640-acre drilling and spacing units for certain lands including Sections 9, 10, 14, 15, and 16, Township 11 North, Range 63 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation with no more than one (1) horizontal well to be drilled in each drilling and spacing unit.

 

5.    On October 8, 2010, EOG, filed a verified application (processed as Docket No. 1101-SP-03) requesting that the Commission: (i) establish three exploratory drilling and spacing units, each such unit consisting of approximately 1,280 acres in a “laydown” configuration and allowing the drilling of up to two (2) horizontal wells in each such unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, and (ii) modify Order No. 421-1 to vacate the established 640-acre drilling and spacing units on the below described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

 

Township 11 North, Range 63 West, 6th P.M.

1,280-acre DSU #1: Sections 9 and 10

1,280-acre DSU #2: Sections 14 and 15

1,280-acre DSU #3: Sections 15 and 16

 

6.    On January 13, 2011, the Commission issued Order No. 421-4, which among other things, vacated five (5) approximate 640-acre drilling and spacing units established for Sections 9, 10, 14, 15, and 16, Township 11 North, Range 63 West, 6th P.M. under Order No. 421-1, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.  Order No. 421-4 also established three approximate 1,280-acre laydown drilling and spacing units for certain lands located in said Sections 9, 10, 14, 15, and 16 (with overlapping drilling and spacing units for said Section 15) and approved of up to two horizontal wells within each 1,280-acre drilling and spacing unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.   

 

7.    On or about May 25, 2011, Commission permitting staff (“Staff”) suspended three of EOG’s Permits-to-Drill (“APDs”) for additional horizontal wells that EOG intended to be approved by Order No. 421-4 for the Application Lands.  Specifically, the Staff suspended the APDs for the Critter Creek #32-10H Well (API #05-123-33354), which is the horizontal well planned for 1,280-acre DSU #1, the Critter Creek #33-15H Well (API #05-123-33355), which is the horizontal well planned for the 1,280-acre DSU #2, and the Critter Creek #34-16H Well (API #05-123-33103), which is the horizontal well planned for the 1,280-acre DSU #3.  Staff’s explanation for suspending the three APDs was that Order No. 421-4 authorized two horizontal wells in each of the three 1,280-acre drilling and spacing units, and each unit already had two existing wells.

 

8.    In order to clarify the approved 1,280-acre drilling and spacing units for the Application Lands, and the effect the 1,280-acre drilling and spacing units have on the established 640-acre drilling and spacing units (pursuant to Order No. 421-1), EOG, by its attorneys, filed a verified application (the “Application”) requesting that the Commission amend Order No. 421-4 to address the intent and requests included in EOG’s October 8, 2010 application as follows:

 

            i) vacate the vacation of the approximate 640-acre drilling and spacing units for Sections 9, 10, 14, 15, and 16, Township 11 North, Range 63 West, 6th P.M, such that the five 640-acre spacing units which existed immediately prior to the entry of Order 421-4 continue to exist;

 

ii) confirm approval of one horizontal well in each of the established "rolling" laydown 1,280-acre drilling and spacing units for said lands, in addition to the single existing wells in each of the 640-acre units;

 

iii) confirm that one horizontal well is approved in each of the 1,280-acre drilling and spacing units for said lands, for a total of three wellbores in the two sections of Unit #1, and a total of four wellbores in the two sections of Unit #2 and Unit #3; and

 

 iv) recognize that due to overlapping 1,280-acre drilling and spacing units, there will be portions of up to three horizontal wellbores within said Section 15. 

 

9.    On May 26, 2011, EOG met with Commission Staff and Hearings Unit staff in an attempt to resolve the permitting issue described in Finding No. 7 above. The result was an agreement to proceed in a manner consistent with this Order.

 

10.  On June 15, 2011, EOG, 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.

 

11.  Testimony and exhibits submitted in support of the Application by Jason McLaren, Landman for EOG, explained the background surrounding this Application and the processing of Docket No. 1101-SP-03 which resulted in Order No. 421-4.

 

12.  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.

 

13.  EOG agreed to be bound by oral order of the Commission. 

 

14.  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 amending Order No. 421-4 to:  (1) vacate the vacation of the approximate 640-acre drilling and spacing units for Sections 9, 10, 14, 15, and 16, Township 11 North, Range 63 West, 6th P.M. for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; (2) confirm the approval of one horizontal well in each of the established "rolling" laydown 1,280-acre drilling and spacing units for said lands, in addition to the single existing wells in each of the 640-acre units, for a total of three wellbores in the two sections of Unit #1, and a total of four wellbores in the two sections of Units #2 and Unit #3, including the wellbores of the 640-acre units, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and (3) recognize that due to overlapping 1,280-acre drilling and spacing units, there will be portions of up to three horizontal wellbores within said Section 15, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. 

 

ORDER

 

                        NOW, THEREFORE IT IS ORDERED, that the vacation of the approximate 640-acre drilling and spacing units for Sections 9, 10, 14, 15, and 16, Township 11 North, Range 63 West, 6th P.M. granted in Order No 421-4 is hereby vacated, such that the five (5) 640-acre drilling and spacing units in these sections that existed prior to the entry of Order No. 421-4 are reinstated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

IT IS FURTHER ORDERED, that one horizontal well is hereby approved in each of the three established "rolling" laydown 1,280-acre drilling and spacing units (“DSUs”) as described below, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

 

Township 11 North, Range 63 West, 6th P.M.

1,280-acre DSU #1: Sections 9 and 10

1,280-acre DSU #2: Sections 14 and 15

1,280-acre DSU #3: Sections 15 and 16

 

These three horizontal wells permitted in the 1,280-acre drilling and spacing units described above are in addition to the single existing wells in each of the five (5) reinstated 640-acre units.  This provision will result in a total of three wellbores in the two sections of DSU #1, and a total of four wellbores in the two sections of DSU #2 and DSU #3, and portions of up to three horizontal wellbores within Section 15.  The sketch of the existing and proposed wellbores attached to the Application may be relied upon as what is intended by this Order.

 

                        IT IS FURTHER ORDERED, all other provisions of Order No. 421-4 not inconsistent with this Order remain in effect.

 

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 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    28th    day of June, 2011, as of June 27, 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

June 28, 2011