BEFORE
THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE NIOBRARA AND FRONTIER FORMATIONS, UNNAMED FIELD, JACKSON COUNTY, COLORADO |
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CAUSE NO. 531
DOCKET NO. 1406-SP-2066
ORDER NO. 531-11 |
REPORT OF THE COMMISSION
The Commission heard this matter on June 17, 2014, at the Rifle Branch Library, Garfield County Public Library District, 207 East Avenue, Rifle, Colorado, upon application for an order to establish an approximate 1280-acre drilling and spacing unit for Sections 10 and 11, Township 7 North, Range 81 West, 6th P.M., and approve up to 14 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Frontier Formations.
FINDINGS
The Commission finds as follows:
1. EE3 LLC (“EE3” 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. 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. Sections 10 and 11, Township 7 North, Range 81 West, 6th P.M. are subject to Rule 318.a. for the Niobrara and Frontier Formations.
5. On April 17, 2014, EE3, by its attorneys, filed with the Commission a verified application (“Application”) for an order to establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to 14 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Frontier Formations, with the productive interval of the wellbore to be located no less than 600 feet from the unit boundaries and no closer than 300 feet from the productive interval of any other wellbore located within the unit, without exception being granted by the Director:
Township 7 North, Range 81 West, 6th P.M.
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Section 10: |
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Section 11: |
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Applicant requests to locate the surface facilities for the proposed wells on no more than one wellpad per quarter section.
6. On June 3, 2014, EE3, 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.
7. On June 10, 2014, the Bureau of Land Management (“BLM”) and EE3 reached an agreement wherein EE3 agrees to submit a Communitization Agreement (CA) to the BLM within 90 days of the spud of the first well in any drilling and spacing unit that contains leased Federal minerals. The Application Lands contain leased minerals managed by BLM.
8. Land testimony and exhibits submitted in support of the Application by Douglas C. Sandridge, Vice President of Land for EE3, showed that EE3 owns 100% of the leasehold interests underlying the Application Lands.
9. Geologic testimony and exhibits submitted in support of the Application by Jeffrey Dynda, Geologist for EE3, showed that the Niobrara Formation underlies the entirety of the Application Lands. Further testimony showed the proposed lateral azimuth will maximize stimulation of the reservoir.
10. Engineering testimony and exhibits submitted in support of the Application by Richard F. McClure, President for EE3, showed that a 1280-acre drilling and spacing unit will allow an additional well to be placed across the section boundary, for a total of 14 wells within the proposed unit. Further testimony showed that the drilling, completion and production of the proposed horizontal wells in the Application Lands will better capture reserves from the reservoir underlying the two sections, and thereby prevent waste while protecting correlative rights.
11. 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.
12. EE3 agrees to be bound by oral order of the Commission.
13. 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 establish an approximate 1280-acre drilling and spacing unit for Sections 10 and 11, Township 7 North, Range 81 West, 6th P.M., and approve up to 14 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Frontier Formations.
ORDER
IT IS HEREBY ORDERED:
1. Two approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and up to 14 horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Frontier Formations.
Township 7 North, Range 81 West, 6th P.M.
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Section 10: |
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Section 11: |
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2. The productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries and no closer than 300 feet from the productive interval of any other well producing within the unit, without exception being granted by the Director:
3. All wells drilled permitted under this Order shall to be drilled from no more than one wellpad per quarter section within the unit.
4. EE3 shall submit a Communitization Agreement (CA) to the BLM within 90 days of the spud of the first well in any drilling and spacing unit that contains leased Federal minerals.
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 30 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 July, 2014, as of June 17, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By_________________________________
Robert J. Frick, Secretary