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. 160600251
TYPE: ADDITIONAL WELLS
ORDER NO. 531-30 |
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 nine horizontal wells within an approximate 617.38-acre drilling and spacing unit established by Order No. 531-2 for Section 18, 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. Section 18, Township 7 North, Range 80 West, 6th P.M., is 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 various lands, including a 617.38-acre drilling and spacing unit for Section 18, 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. The permitted well was to be located no closer than 600 feet from the unit boundaries for production of oil and associated hydrocarbons from the Niobrara Formation.
6. On or about October 28, 2013, the Commission entered Order No. 531-7 which authorized one additional horizontal well, for a total of three horizontal wells, within an approximate 617.38-acre drilling and spacing unit established for Section 18, Township 7 North, Range 80 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the treated interval of the horizontal wellbore 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 September 14, 2015, the Commission entered Order No. 531-21 which, among other things, modified Order No. 531-2 as to the Application Lands, to allow 300- foot setbacks as to the unit boundaries of the drilling and spacing unit established for Section 18, Township 7 North, Range 80 West, 6th P.M., approved 150-foot inter-well setbacks, and approved up to four horizontal wells within the drilling and spacing unit established for Section 18, Township 7 North, Range 80 West, 6th P.M., for the production of the oil, gas, and associated hydrocarbons from the Niobrara Formation.
Township 7 North, Range 80 West, 6th P.M.
Section 18: Lots 1-4, E/2W/2, E/2
9. Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than four multi-well pads, unless the Director grants an exception.
10. 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.
11. 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.
12. 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 460 feet to 480 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.
13. 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 an approximate 617.38-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by nine horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara Formation.
14. 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.
15. SandRidge agreed to be bound by oral order of the Commission.
16. 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 nine horizontal wells within an approximate 617.38-acre drilling and spacing unit established by Order No. 531-2 for Section 18, 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 nine horizontal wells within an approximate 617.38-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 18: Lots 1-4, E/2W/2, E/2
2. All wells permitted under this Order shall be drilled from no more than four multi-well pads within the Application Lands, 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 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