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 FORMATION, UNNAMED FIELD, JACKSON COUNTY, COLORADO |
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CAUSE NO. 531
DOCKET NO. 160600250
TYPE: ADDITIONAL WELLS
ORDER NO. 531-29 |
REPORT OF THE COMMISSION
The Commission heard this matter on June 6, 2016, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to approve a total of up to eight horizontal wells within each of three approximate 628-acre to 640-acre drilling and spacing units established by Order No. 531-2 for Sections 7, 9, and 19, Township 7 North, Range 80 West, 6th P.M., for the production of the 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”), 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 Commission Rules provides that a well to be drilled to depth of 2,500 feet or greater shall be located not less than 600 feet from any lease line, and shall be located not less than 1,200 feet from any other producible oil or gas well when drilling to the same common source of supply, unless authorized by the Commission upon hearing. Sections 7, 9, and 19, Township 7 North, Range 80 West, 6th P.M., are subject to this Rule for the production of the oil, gas, and associated hydrocarbons from the Niobrara Formation.
5. On or about July 15, 2008, the Commission entered Order No. 531-2 which, among other things, extended the provisions of Order No. 531-1 and established drilling and spacing units for certain lands, including an approximate 628-acre drilling and spacing unit for Section 7, an approximate 640-acre drilling and spacing unit for Section 9, and an approximate 629.16-acre drilling and spacing unit for Section 19, Township 7 North, Range 80 West, 6th P.M., and approved the drilling and completion of one horizontal well, with the option to drill a second horizontal well, in each of the drilling and spacing units for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the permitted well location to be no closer than 600 feet from the unit boundary.
6. On or about October 28, 2013, the Commission entered Order No. 531-6 which authorized an additional horizontal well, for a total of three horizontal wells, in the drilling and spacing unit established by Order No. 531-2 for Section 7, Township 7 North, Range 80 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons produced from the Niobrara Formation, with the treated intervals of the horizontal wellbores to be no closer than 600 feet from the unit boundaries, and no closer than 600 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director
7. On or about May 18, 2015, the Commission entered Order No. 531-18 which, among other things, modified Order No. 531-2 as to Sections 7 and 9, Township 7 North, Range 80 West, 6th P.M., to: 1) allow the productive interval of any horizontal well to be no closer than 300 feet from the unit boundaries; 2) establish 150 feet inter-well setbacks; and 3) authorize up to four horizontal wells within the 640-acre drilling and spacing unit for the production of oiul, gas, and associated hydrocarbons form the Niobrara Formation.
8. On or about September 14, 2015, the Commission entered Order No. 531-21 which, among other things, modified Order No. 531-2 as to Section 19, Township 7 North, Range 80 West, 6th P.M., to allow 300 foot setbacks as to the unit boundaries of the drilling and spacing unit and 150 foot inter-well setbacks, and approved up to four horizontal wells within the drilling and spacing unit, for the production of the oil, gas, and associated hydrocarbons from the Niobrara Formation.
Township 7 North, Range 80 West, 6th P.M.
Section 7: All
Section 9: All
Section 19: All
10. Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than four multi-well pads in each drilling and spacing unit, unless the Director grants an exception.
11. On May 16, 2016, 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.
12. SandRidge, by its attorneys, and the Bureau of Land Management (BLM) agreed that the drilling and spacing unit contains federal leased and/or unleased minerals. As such, SandRidge agreed to submit a Communitization Agreement (“CA”) to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission’s Rules) from the initial well drilled within the drilling and spacing unit.
13. 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.
14. Geoscience testimony and exhibits submitted in support of the Application by Simon Anzaldua, Geologist for SandRidge, showed the Niobrara Formation is present throughout the Application Lands, is approximately 450 feet to 500 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Niobrara Formation is a sequence of chalks, marls and limestones and is a common source of supply.
15. Engineering testimony and exhibits submitted in support of the Application by Wesley K. McAlister, Reservoir Engineer for SandRidge, showed that the average drainage area for analog horizontal Niobrara Formation wells is estimated at 40.26 acres, and approximate 628-acre to 640-acre drilling and spacing units are therefore not less than the maximum area than can be efficiently, economically and effectively drained by eight horizontal wells in each unit producing oil, gas and associated hydrocarbons from the Niobrara Formation.
16. 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.
17. SandRidge agreed to be bound by oral order of the Commission.
18. 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 approve a total of up to eight horizontal wells within each of three approximate 628-acre to 640-acre drilling and spacing units established by Order No. 531-2 for Sections 7, 9, and 19, Township 7 North, Range 80 West, 6th P.M., for the production of the oil, gas, and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. A total of up to eight horizontal wells within each of three approximate 628-acre to 640-acre drilling and spacing unit established by Order No. 531-2 for the below described lands are hereby approved for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of any horizontal wellbore to be 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:
Township 7 North, Range 80 West, 6th P.M.
Section 7: All
Section 9: All
Section 19: All
2. All wells permitted under this Order shall be drilled from no more than four multi-well pads within each drilling and spacing unit, unless the Director grants an exception.
3. SandRidge shall submit a CA to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission’s Rules) from the initial well drilled within the drilling and spacing unit.
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 21st day of June, 2016, effective as of June 6, 2016.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ____________________________________
Julie Murphy, Secretary