BEFORE THE OIL & GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

IN THE MATTER OF PROMULGATION AND                 )           CAUSE NO. 510

ESTABLISHMENT OF FIELD RULES TO                       )

GOVERN OPERATIONS IN THE GRAND VALLEY       )           ORDER NO. 510-54

FIELD, GARFIELD COUNTY, COLORADO                    )          

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 9:00 a.m. on June 1, 2010, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to vacate Order No. 510-36 only as to the application lands and establish a 160-acre drilling and spacing unit for the NEž of Section 35, Township 7 South, Range 96 West 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group and to continue to allow the equivalent of one well per 10 acres.

 

FINDINGS

The Commission finds as follows:

1.   Noble Energy Inc. ("Noble"), 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 June 9, 1994, the Commission issued Order No. 510-1, which among other things, amended Rule 318.a. of the Rules and Regulations of the Commission and established new setback rules for certain lands, including Section 35, Township 7 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, with the  permitted well located no closer than 400 feet from the boundaries of any lease line and no closer than 800 feet from any existing Williams Fork Formation well.

 

5.  On September 11, 2007, the Commission issued Order No. 510-36, which among other things, established 40-acre drilling and spacing units, for certain lands including the NEž of Section 35, Township 7 South, Range 96 West, 6th P.M., and approved the equivalent of one well per 10 acres, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group, with the permitted well to be located no closer than 100 feet from the unit boundary and no closer than 200 feet from the unit boundaries where 10-acre density drilling for Williams Fork and Iles Formation wells has not been allowed. 

 

6.  On April 12, 2010, Noble Energy, Inc., by its attorneys, filed with the Commission a verified application to:

 

(a)   Vacate the existing 40-acre drilling and spacing units established for the NEž of Section 35, Township 7 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations; and

 

(b)   Establish an approximate 160-acre drilling and spacing unit for the NEž of Section 35, Township 7 South, Range 96 West, 6th P.M., with the continuing approval of 10-acre equivalent well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, with setback and development rules described below:

 

All future Williams Fork and Iles Formation wells to be drilled upon said drilling and spacing unit should be located downhole anywhere in the drilling and spacing unit but no closer than 100 feet from the boundaries of the unit without exception being granted by the Director of the Commission.  It is provided however that in cases where the lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork and Iles Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit so abutting or cornering such lands without exception being granted by the Director of the Commission.

 

That, except as previously authorized by order of the Commission, wells to be drilled under this order should be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter-quarter section (or lots or parcels approximately equivalent thereto) and that Iles Formation wells shall be drilled and completed only in association with the drilling and completing of wells in the Williams Fork Formation, unless exception is granted by the Commission pursuant to application made for such exception.

7.  May 18, 2010, Noble, 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.  Testimony and exhibits submitted in support of the application showed that Noble is a leasehold owner in the application lands and that the U.S. Department of Interior, Bureau of Land Management (“BLM”) owns 50% of the mineral interests in the application lands.  Further testimony indicated that Noble has had discussions with the BLM, and the BLM does not object to the verified application.  Additional testimony indicated that granting the application would decrease post-reclamation impacts to the surface owner.  Further testimony and exhibits indicated that Noble is not requesting that the Commission make any changes to the existing well density or setback requirements for the application lands that were previously approved by this Commission and that all of the interested parties received notice of the verified application.

9.  The above-referenced testimony and exhibits showed that the proposed spacing and well location rules will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, will not violate correlative rights, and will decrease post- reclamation surface impacts.

 

10.  Noble agreed to be bound by oral order of the Commission.

 

                        11.  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.b., the Commission should enter an order to vacate the existing 40-acre drilling and spacing units established for the NEž of Section 35, Township 7 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations and establish an approximate 160-acre drilling and spacing unit for the NEž of Section 35, Township 7 South, Range 96 West, 6th P.M.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED, that the 40-acre drilling and spacing units established for the below-listed lands by Order No. 510-36, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group are hereby vacated and that an approximate 160-acre drilling and spacing unit is hereby established for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group:

 

Township 7 South, Range 96 West, 6th P.M.

                                    Section 35: NEž

 

IT IS FURTHER ORDERED, that all Williams Fork and Iles Formation wells to be drilled upon said drilling and spacing unit should be located downhole anywhere in the drilling and spacing unit but no closer than 100 feet from the boundaries of the unit without exception being granted by the Director of the Commission.  It is provided however that in cases where the lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork and Iles Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit so abutting or cornering such lands without exception being granted by the Director of the Commission.

 

IT IS FURTHER ORDERED, that, except as previously authorized by order of the Commission, wells to be drilled under this order should be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter-quarter section (or lots or parcels approximately equivalent thereto) and that Iles Formation wells shall be drilled and completed only in association with the drilling and completing of wells in the Williams Fork Formation, unless exception is granted by the Commission pursuant to application made for such exception.

 

IT IS FURTHER ORDERED, that 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 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 June, 2010, as of June 1, 2010.

 

                                                                                    OIL AND GAS CONSERVATION COMMISSION

            OF THE STATE OF COLORADO

 

 

            By____________________________________

                        Carol Harmon, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

June 29, 2010