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, UNNAMED FIELD, JACKSON COUNTY, COLORADO

 

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CAUSE NO. 531

 

DOCKET NO. 160100046

 

TYPE: SPACING

 

ORDER NO. 531-22

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on January 26, 2016, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to 1) vacate two approximate 640-acre drilling and spacing units established by No. 531-2 for Sections 17 and 20, Township 7 North, Range 80 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate Order No. 531-18, but only as to Sections 17 and 20, Township 7 North, Range 80 West, 6th P.M., and 3) establish an approximate 1280-acre drilling and spacing unit for Sections 17 and 20, Township 7 North, Range 80 West, 6th P.M., and approve up to eight 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.         SandRidge Exploration & Production LLC, Operator No. 10598 (“SandRidge” 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 17 and 20, Township 7 North, Range 80 West, 6th P.M., are subject to this Rule.

 

5.           On July 15, 2008, the Commission entered Order No. 531-2 which, among other things, established 640-acre drilling and spacing units for various lands, including Sections 17 and 20, Township 7 North, Range 80 West, 6th P.M., and approved one horizontal well, with the option to drill a second horizontal well, within each unit for the production of oil and associated hydrocarbons from the Niobrara Formation.

 

6.         On May 18, 2015, the Commission entered Order No. 531-18 which, among other things, modified Order No. 531-2 to allow the productive interval of any horizontal well to be no closer than 300 feet from the unit boundaries established by the order; modified Order No. 531-2 to allow the productive interval of any horizontal well to be no closer than 150 feet from the productive interval of another horizontal well producing from the Niobrara Formation within the same unit; and approved up to four horizontal wells within each 640-acre drilling and spacing unit established by Order No. 531-2 for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

7.         On December 21, 2015, SandRidge, by its attorneys, filed a verified amended application (“Application”) pursuant to §34-60-116 C.R.S. for an order to: 1) vacate the approximate 640-acre drilling and spacing units established by Order No. 531-2 for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate Order No. 531-18, but only as to the Application Lands; and 3)  establish an approximate 1280-acre drilling and spacing unit for the Application Lands and to approve up to eight horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 300 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 granted by the Director, with the wells to be drilled from no more than three multi-well pads, without exception granted by the Director:

 

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

Section 17:  All

Section 20:  All

 

8.         On January 5, 2015, SandRidge, 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.         Land testimony and exhibits submitted in support of the Application by Richard Silman, Landman for SandRidge, showed that SandRidge holds oil and gas leasehold interests and has a right to drill in the Application Lands.            

 

10.       Geologic testimony and exhibits submitted in support of the Application by Scott Cherry, Geologist for SandRidge, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 455 to 475 feet thick, and is generally of uniform thickness throughout the Application Lands.

 

11.       Engineering testimony and exhibits submitted in support of the Application by Earuch F. Broacha, Reservoir Engineering Advisor for SandRidge, showed that the drainage area for analog horizontal Niobrara Formation wells are estimated at 46.02 acres, and an approximate 1280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by eight horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara Formation.

 

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 hydrocarbons, and will not violate correlative rights.

 

13.       SandRidge 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 to: 1) vacate two approximate 640-acre drilling and spacing units established by No. 531-2 for Sections 17 and 20, Township 7 North, Range 80 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate Order No. 531-18, but only as to Sections 17 and 20, Township 7 North, Range 80 West, 6th P.M., and 3) establish an approximate 1280-acre drilling and spacing unit for Sections 17 and 20, Township 7 North, Range 80 West, 6th P.M., and approve up to eight horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Two approximate 640-acre drilling and spacing units established by Order No. 531-2 for Sections 17 and 20, Township 7 North, Range 80 West, 6th P.M., are hereby vacated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

2.         Order No. 531-18 is hereby vacated in so far as it applies to Sections 17 and 20, Township 7 North, Range 80 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

3.      An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to eight horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

 

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

Section 17:  All

Section 20:  All

 

4.         The treated interval of the wellbore will be located no closer than 300 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless the Director grants an exception.

 

5.         The wells shall be drilled from no more than three multi-well pads, unless the Director grants an exception.

 

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 1st day of February, 2016, as of January 26, 2016.

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By__________________________________

Julie Murphy, Secretary