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. 170500285
TYPE: SPACING
ORDER NO. 531-46 |
REPORT OF THE COMMISSION
The Commission heard this matter on May 1, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, 80203, upon application for an order to: 1) vacate Orders Nos. 531-18, 531-24, 531-26 and 531-27 only as to Section 31, Township 8 North, Range 80 West, 6th P.M. and Section 6, Township 7 North, Range 80 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 portions of Section 31, Township 8 North, Range 80 West, 6th P.M. and Section 6, Township 7 North, Range 80 West, 6th P.M., and approve up to 8 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. On July 15, 2008, the Commission entered Order No. 531-2 which, among other things, established approximate 640-acre drilling and spacing units for certain lands, Section 6, Township 7 North, Range 80 West, 6th P.M., and approved one horizontal well within each unit, with the option to drill a second horizontal well within each unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
5. 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 established an approximate 640-acre drilling and spacing unit for Section 36, Township 8 North, Range 81 West, 6th P.M., and three other sections, with up to four horizontal wells approved within each unit, with the treated intervals of the wellbores no less than 300 feet from the unit boundaries and the interwell setback of no less than 150 feet from the productive interval of another well producing from the Niobrara Formation, without exception being granted by the Director.
6. On March 7, 2016, the Commission entered Order No. 531-24 which, among other things, approved four additional horizontal wells, for a total of eight horizontal wells, on the approximate 640-acre drilling and spacing unit established by Order No. 531-2 for Section 6, Township 7 North, Range 80 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
7. On April 18, 2016, the Commission entered Order No. 531-26 which modified the setbacks established by Order No. 531-18 for Section 6, Township 7 North, Range 80 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
8. On June 6, 2016, the Commission entered Order No. 531-27 which approved four additional horizontal wells, for a total of eight horizontal wells, on an approximate 640-acre drilling and spacing unit established by Order No. 531-18 for Section 31 Township 8 North, Range 80 West, 6th P.M., 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.
9. On March 2, 2017, SandRidge, by its attorneys, filed with the Commission a verified application (“Application”) for an order to: 1) vacate Orders Nos. 531-18, 531-24, 531-26 and 531-27 only as to the following described lands (“Application Lands”), and 2) establish an approximate 1,280-acre drilling and spacing unit for the Application Lands, and approve the drilling of up to eight horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:
Township 8 North, Range 80
West, 6th P.M.
Section 31: All
Township 7 North, Range 80
West, 6th P.M.
Section 6: All
10. The online records maintained by the COGCC indicate that there are no vertical or directional wells currently producing in the Application Lands.
11. Additionally, the online records maintained by the COGCC indicate that there are no horizontal wells currently producing in the Application Lands.
12. The proposed horizontal wells will be oriented in a general north/south direction. The productive intervals of the wellbore should be not less than 100 feet from the northern and southern unit boundaries and 300 feet from the eastern and western unit boundaries, with an inter-well setback of not less than 150 feet from the productive interval of a well producing from the Niobrara Formation, unless an exception is granted by the Director.
13. On April 10, 2017, 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.
14. Testimony and exhibits submitted in support of the Application by Richard Silman, Landman for SandRidge, showed that SandRidge owns a leasehold interests in the Application Lands.
15. Geology testimony and exhibits submitted in support of the Application by Scott Cherry, Geologist for SandRidge, showed that the thickness of the Niobrara Formation underlying the Application Lands ranges from approximately 400 to 480 feet thick. Further testimony showed that the Niobrara Formation is a sequence of chalks and marls and is a common source of supply.
16. Engineering testimony and exhibits submitted in support of the Application by Wesley K. McAlister, Reservoir Engineer for SandRidge, showed that drilling and completing horizontal wells within the Niobrara Formation underlying the Application Lands is an efficient and economic method of developing the resource. Testimony concluded an appropriate 1280-acre unit would accommodate the drilling of up to a total of eight authorized horizontal wells drilled to the Niobrara Formation, while protecting correlative rights of adjacent mineral owners.
17. 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.
18. Applicant agrees to be bound by oral order of the Commission.
19. 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 Orders Nos. 531-18, 531-24, 531-26 and 531-27 only as to Section 31, Township 8 North, Range 80 West, 6th P.M. and Section 6, Township 7 North, Range 80 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 portions of Section 31, Township 8 North, Range 80 West, 6th P.M. and Section 6, Township 7 North, Range 80 West, 6th P.M., and approve up to 8 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. Order Nos. 531-18, 531-24, 531-26 and 531-27 are hereby vacated only as to the Application Lands.
2. An approximate 1280-acre drilling and spacing unit for the below described lands is hereby established, and a total of up to 8 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation are authorized, with the productive intervals of the wellbores of any permitted wells to be located not less than 100 feet from the northern and southern unit boundaries and 300 feet from the eastern and western unit boundaries, and not less than 150 feet from the productive interval of any well being drilled or producing from the Niobrara Formation, unless an exception is granted by the Director:
Township 8 North, Range 80
West, 6th P.M.
Section 31: All
Township 7 North, Range 80
West, 6th P.M.
Section 6: All
3. Any horizontal wells to be drilled under the Order for production from the Niobrara Formation will be drilled from the surface of the drilling unit, or on adjacent lands with consent of the landowner, from no more than four surface locations, 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 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 12th day of May 2017, as of May 1, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Peter Gowen, Acting Secretary