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 IN THE UNNAMED FIELD, JACKSON COUNTY, COLORADO |
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CAUSE NO. 531
DOCKET NO. 160700286
TYPE: EXCEPTION LOCATION
ORDER NO. 531-41 |
REPORT OF THE COMMISSION
The Commission heard this matter on October 24, 2016, at the Northeastern Junior College, Hayes Center Student Ballroom, 100 College Avenue, Sterling, Colorado, upon application for an order to modify the setbacks in Order No. 531-21 to provide that the productive intervals of any wellbore shall be no closer than 100 feet from the northern and southern boundaries of the approximate 640-acre drilling and spacing unit established by Order No. 531-2 for Section 13, Township 7 North, Range 81 West, 6th P.M., 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”), 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.
5. On July 15, 2008, the Commission entered Order No. 531-2 to extend the provisions of Order No. 531-1 to the Application Lands, which order established various drilling and spacing units for 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, with the permitted wells to be located no closer than 600 feet from the unit boundary, for the production of gas and associated hydrocarbons from the Niobrara Formation.
6. On September 14, 2015, the Commission entered Order No. 531-21, which 1) modified the setbacks for the drilling and spacing unit established by Order No. 531-2 for the Application Lands, and other lands, to allow 300 foot setbacks as to the unit boundaries and 150 foot interwell setbacks, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) approved up to four horizontal wells within the unit, and other lands, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
7. On May 19, 2016, Applicant, by its attorneys, filed with the Commission a verified application (“Application”) for an order to modify the setbacks for the Application Lands to provide that the productive intervals of any wellbore shall be no closer than 100 feet from the northern and southern boundaries of the approximate 640-acre drilling and spacing unit 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, without exception being granted by the Director:
Township 7 North, Range 81 West, 6th P.M.
Section 13: All
Applicant did not requesting to modify the boundary setbacks established for the eastern or western boundaries of the drilling and spacing unit.
8. Applicant certified that it has no objection to any request to modify the setback location to a reciprocal 100 feet as to any lands adjoining the northern or southern boundaries of the approximate 640-acre existing drilling and spacing unit established by Order 531-2.
9. On June 30, 2016, Petroleum Land Services, Inc. (“PLS”) filed a Protest to the Application stating that it owned an interest in the northern boundary of the adjacent unit and its correlative rights would be adversely impacted due to the drainage of the minerals in the contiguous section on the southern boundary of the unit.
10. On October 12, 2016, Sandridge, by its attorneys filed an Amended Application, withdrawing the request for reducing setbacks from the southern boundary of the drilling and spacing unit established for the Application Lands.
11. On October 13, 2016, PLS withdrew its protest to the Application.
12. On October 17, 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.
13. Testimony and exhibits submitted in support of the Application by Richard Silman, Landman for Applicant, showed that SandRidge owns substantial leasehold interests in the Application Lands.
14. Testimony and exhibits submitted in support of the Application by Scott Cherry, Geologist for Applicant, showed that the Niobrara Formation underlies the entirety of the Application Lands and is a common source of supply. Further testimony showed that the total thickness of the Niobrara Formation underlying the Application Lands ranges from approximately 460 to 490 feet.
15. Engineering testimony and exhibits submitted in support of the Application by Wesley McAlister, Reservoir Engineer in the Rockies Division for Applicant, showed that a setback of 100 feet from the northern unit boundary will allow production of reserves that otherwise would not be recovered from the Niobrara Formation, thus preventing waste while protecting correlative rights.
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 agrees to be bound by oral order of the Commission.
18. Based on the facts stated in the verified Application, having resolved all protests, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order to modify the setbacks in Order No. 531-21 to provide that the productive intervals of any wellbore shall be no closer than 100 feet from the northern boundary of the approximate 640-acre drilling and spacing unit established by Order No. 531-2 for Section 13, Township 7 North, Range 81 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. The setbacks in Order No. 531-21 are hereby modified such that the productive interval of any permitted well within the approximate 640-acre existing drilling and spacing unit established by Order No. 531-21 for the below-described lands shall be no closer than 100 feet from the northern boundary of the drilling and spacing unit, for the production of the oil, gas, and associated hydrocarbons from the Niobrara Formation, unless an exception is granted by the Director:
Township 7 North, Range 81 West, 6th P.M.
Section 13: All
IT IS FURTHER ORDERED:
1. The provisions contained in the above order shall become effective immediately.
2. The Commission expressly reserves the 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 3rd day of November, 2016, as of October 24, 2016.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Julie Murphy, Secretary