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. 160600254
TYPE: SPACING
ORDER NO. 531-33
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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: 1) vacate the approximate 1280-acre drilling and spacing unit established by Order No. 531-11 for Sections 10 and 11, Township 7 North, Range 81 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 1280-acre drilling and spacing unit for Sections 11 and 14, Township 7 North, Range 81 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 11 and 14, Township 7 North, Range 81 West, 6th P.M., are subject to this Rule for production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
5. On or about June 17, 2014, the Commission entered Order No. 531-11 which established an approximate 1280-acre drilling and spacing unit for Sections 10 and 11, Township 7 North, Range 81 West, 6th P.M.; approved up to fourteen 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 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.
6. On or about May 18, 2015, the Commission entered Order No. 531-18 which, among other things, modified Order No. 531-11 to allow the productive interval of any horizontal well to be no closer than 300 feet from the unit boundaries established by the order and 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, without exception being granted by the Director. Section 11, Township 7 North, Range 81 West, 6th P.M., is subject to this Order for production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
7. On April 7, 2016, SandRidge, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) vacate the approximate 1280-acre drilling and spacing unit established by Order No. 531-11 for Sections 10 and 11, Township 7 North, Range 81 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“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 productive 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:
Township 7 North, Range 81 West, 6th P.M.
Section 11: All
Section 14: All
8. Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than four multi-well pads within the drilling and spacing unit, unless the Director grants an exception.
9. 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.
10. 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.
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. Geologic testimony and exhibits submitted in support of the Application by Simon Anzaldua, Geologist for SandRidge, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 470 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.
13. Engineering testimony and exhibits submitted in support of the Application by Wesley K. McAlister, Petroleum Engineer for SandRidge, showed that the drainage area for analog horizontal Niobrara Formation wells are estimated at 40.26 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 well 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 enter an order to: 1) vacate the approximate 1280-acre drilling and spacing unit established by Order No. 531-11 for Sections 10 and 11, Township 7 North, Range 81 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 1280-acre drilling and spacing unit for Sections 11 and 14, Township 7 North, Range 81 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. The approximate 1280-acre drilling and spacing unit established by Order No. 531-11 for Sections 10 and 11, Township 7 North, Range 81 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation is hereby vacated.
2. 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 81 West, 6th P.M.
Section 11: All
Section 14: All
3. The productive 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.
4. All wells permitted under this Order shall be drilled from no more than four multi-well pads within the drilling and spacing unit, unless the Director grants an exception.
5. 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 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 21st day of June, 2016, as of June 6, 2016.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Julie Murphy, Secretary