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 AND FRONTIER FORMATIONS, UNNAMED FIELD, JACKSON  COUNTY, COLORADO

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CAUSE NO. 531

 

DOCKET NO. 1407-SP-2096

 

ORDER NO. 531-16

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on July 28, 2014, at the Weld County Administration Building - Events Center, 1150 “O” Street, Greeley, CO, upon application for an order to: 1) establish an approximate 640-acre drilling and spacing unit for Section 15, Township 7 North, Range 80 West, 6th P.M., and approve up to three horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 640-acre drilling and spacing unit for Section 15, Township 7 North, Range 80 West, 6th P.M., and approve up to three horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Frontier Formation.

 

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, 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. Section 15, Township 7 North, Range 80 West, 6th P.M. is subject to Rule 318.a. for the Niobrara and Frontier Formations.

 

5.         On May 29, 2014, EE3, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to: 1) establish an approximate 640-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to three horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 640-acre drilling and spacing unit for the Application Lands, and approve up to three horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Frontier Formation; and 3) require 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 wellbore located in the unit, without exception being granted by the Director:

                       

                        Township 7 North, Range 80 West, 6th P.M.

                        Section 15:      All

                       

Applicant stated that the surface facilities for the proposed wells will be located on no more than one well pad per quarter quarter section within the units.

 

6.         On July 15, 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 July 18, 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 substantial 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 and Frontier Formations have uniform thickness throughout the Application Lands. No average thickness provided.

 

10.       Engineering Testimony and exhibits submitted in support of the Application by Richard F. McClure, President for EE3, showed that the drainage area for horizontal Niobrara wells drilled in the Application Lands is estimated between 69 and 317 acres. The estimated drainage area for horizontal Frontier wells drilled in the Application Lands is estimated at 153 acres. Therefore, a 640-acre drilling and spacing unit is 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 or Frontier Formations.  Such testimony also indicated the proposed drilling and spacing unit will prevent or assist in preventing waste by ensuring that the pool as a whole may be efficiently and economically developed, without prejudice to the rights of other leasehold or mineral owners. 

 

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 agreed 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: 1) establish an approximate 640-acre drilling and spacing unit for Section 15, Township 7 North, Range 80 West, 6th P.M., and approve up to three horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 640-acre drilling and spacing unit for Section 15, Township 7 North, Range 80 West, 6th P.M., and approve up to three horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Frontier Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to three  horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore will be located no closer than 600 feet from the unit boundaries, and no closer than 300 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:

 

                        Township 7 North, Range 80 West, 6th P.M.

                        Section 15:      All

 

2.         An approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to three  horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Frontier Formation, with the productive interval of the wellbore will be located no closer than 600 feet from the unit boundaries, and no closer than 300 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:

 

                        Township 7 North, Range 80 West, 6th P.M.

                        Section 15:      All

 

3.         The proposed wells shall be located on no more than four well pads within the section. 

 

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 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   13th  day of August, 2014, as of July 28, 2014.     

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary