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, JACKSON AND GRAND COUNTIES, COLORADO |
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CAUSE NO. 531
DOCKET NO. 170500286
TYPE: EXCEPTION LOCATION
ORDER NO. 531-47 |
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 reduce setbacks from the exterior boundaries and any uncommitted tract within the Peterson Ridge Federal Exploratory Unit, being lands in Townships 7 and 8 North and Ranges 80 West and 81 West, 6th P.M., (“Peterson Ridge 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 May 18, 2015, the Commission entered Order No. 531-19, which allowed 300 foot setbacks as to the unit boundaries of the Peterson Ridge Unit, composed of the Application Lands, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
5. On March 2, 2017, SandRidge, by its attorneys, filed with the Commission a verified application (“Application”) for an order to: 1) modify the setbacks for the Peterson Ridge Unit, composed of the below-described lands (“Application Lands”), such that the productive interval of any well within the Application Lands should be no less than 100 feet from the boundaries of the Application Lands when measured parallel to the orientation of the wellbore, and no less than 300 feet from the boundaries of the Application Lands when measured perpendicular to the orientation of the wellbore, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, without exception being granted by the Director, and 2) modify the setbacks for the Application Lands such that the productive interval of any well within the Application Lands should be no less than 100 feet from the from the boundaries of any lease or mineral tract not committed to the Application Lands when measured parallel to the orientation of the wellbore, and no less than 300 feet from the from the boundaries of any lease or mineral tract not committed to the Application Lands when measured perpendicular to the orientation of the wellbore, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation:
Township 7 North, Range 80 West, 6th P.M.
Section 1: W½
Section 2: All
Section 3: All
Township 8 North, Range 80 West, 6th P.M.
Section 1: All
Section 2: All
Section 3: All
Section 4: All
Section 5: All
Section 7: All
Section 8: All
Section 9: All
Section 10: All
Section 11: All
Section 12: All
Section 13: All
Section 14: All
Section 15: All
Section 16: All
Section 17: All
Section 18: All
Section 19: All
Section 20: All
Section 21: All
Section 22: All
Section 23: All
Section 24: All
Section 25: All
Section 26: All
Section 27: All
Section 28: All
Section 29: All
Section 30: All
Section 33: All
Section 34: All
Section 35: All
Section 36: All
Township 8 North, Range 81 West, 6th P.M.
Section 13: All
Section 24: All
Section 25: All
6. Applicant’s analysis of wells in the vicinity of the Application Lands indicates that drainage radius of such wells parallel to the wellbore orientation (that is, past the “heels” and “toes” of the wells) does not extend more than 100 feet, and that 100 feet is adequate to protect the correlative rights of owners of tracts that are adjacent to the Application Lands, or that are within the Application Lands but are not committed to the Peterson Ridge Unit.
7. 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.
8. Testimony and exhibits submitted in support of the Application by Richard Silman, Senior Landman for SandRidge showed that SandRidge owns a leasehold interests in the Application Lands.
9. 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 440 to 520 feet thick. Further testimony showed that the Niobrara Formation is a sequence of chalks and marls and is a common source of supply.
10. 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 the productive interval of any well within the Application Lands should be no less than 100 feet from the boundaries of the Application Lands and from the boundaries of any lease or mineral tract not committed to the Application Lands, when measured parallel to the orientation of the wellbore.
11. 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.
12. Applicant agrees to be bound by oral order of the Commission.
13. 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 reduce setbacks from the exterior boundaries and any uncommitted tract within the Peterson Ridge Federal Exploratory Unit, being lands in Townships 7 and 8 North and Ranges 80 West and 81 West, 6th P.M., (“Peterson Ridge Unit”) for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. The setbacks for the Peterson Ridge Federal Exploratory Unit are hereby modified such that the productive interval of any well within the below-described lands (“Application Lands”) should be no less than 100 feet from the boundaries of the Application Lands when measured parallel to the orientation of the wellbore, and no less than 300 feet from the boundaries of the Application Lands when measured perpendicular to the orientation of the wellbore, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, unless an exception granted by the Director:
Township 7 North, Range 80 West, 6th P.M.
Section 1: W½
Section 2: All
Section 3: All
Township 8 North, Range 80 West, 6th P.M.
Section 1: All
Section 2: All
Section 3: All
Section 4: All
Section 5: All
Section 7: All
Section 8: All
Section 9: All
Section 10: All
Section 11: All
Section 12: All
Section 13: All
Section 14: All
Section 15: All
Section 16: All
Section 17: All
Section 18: All
Section 19: All
Section 20: All
Section 21: All
Section 22: All
Section 23: All
Section 24: All
Section 25: All
Section 26: All
Section 27: All
Section 28: All
Section 29: All
Section 30: All
Section 33: All
Section 34: All
Section 35: All
Section 36: All
Township 8 North, Range 81 West, 6th P.M.
Section 13: All
Section 24: All
Section 25: All
2. The setbacks for the Application Lands are hereby modified such that the productive interval of any well within the Application Lands should be no less than 100 feet from the from the boundaries of any lease or mineral tract not committed to the Application Lands when measured parallel to the orientation of the wellbore, and no less than 300 feet from the from the boundaries of any lease or mineral tract not committed to the Application Lands when measured perpendicular to the orientation of the wellbore, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, unless an exception granted by the Director.
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 an exception granted by the Director.
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