BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
|
IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE NIOBRARA FORMATION, JACKSON AND GRAND COUNTIES, COLORADO |
) ) ) ) ) ) ) ) |
CAUSE NO. 531
DOCKET NO. 171000763
TYPE: EXCEPTION LOCATION
ORDER NO. 531-56 |
REPORT OF THE COMMISSION
The Commission heard this matter on February 12, 2018, at the Colorado Oil and Gas Conservation Commission offices, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to reduce setbacks from the exterior boundaries and any uncommitted tract within the proposed Beaver Creek Federal Exploratory Unit, covering the lands described on the plat attached as Exhibit A (“Application Lands”), being lands in Townships 7 and 8 North, Range 81 West, 6th P.M., (“Beaver Creek Unit”) for production from the Niobrara Formation, Jackson County, Colorado.
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 3 - 9, 16, and 21 Township 7 North, Range 81 West, 6th P.M., and Sections 20 - 23, 26 – 29, and 32 - 34, Township 8 North, Range 81 West, 6th P.M., are subject to this Rule for the Niobrara Formation.
5. On August 31, 2017 (amended October 24, 2017) SandRidge, by its attorneys, filed with the Commission a verified application (“Application”) for an order (1) modifying the setbacks for the Beaver Creek Unit, composed of the following described lands (“Application Lands”), such that the productive interval of any well within the Beaver Creek Unit should be no less than 100 feet from the boundaries of the Beaver Creek Unit when measured parallel to the orientation of the wellbore, and no less than 300 feet from the boundaries of the Beaver Creek Unit when measured perpendicular to the orientation of the wellbore, for production of the oil, gas, and associated hydrocarbons from the Niobrara Formation, without exception being granted by the Director, and (2) modifying the setbacks for the Beaver Creek Unit such that the productive interval of any well within the Beaver Creek Unit should be no less than 100 feet from the from the boundaries of any lease or mineral tract not committed to the Beaver Creek Unit 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 Beaver Creek Unit when measured perpendicular to the orientation of the wellbore, for 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 3: All
Section 4: All
Section 5: All
Section 6: All
Section 7: All
Section 8: All
Section 9: All
Section 16: All
Section 21: All
Township 8 North, Range 81 West, 6th P.M.
Section 20: S½SE¼, NE¼SE¼
Section 21: All
Section 22: All
Section 23: All
Section 26: All
Section 27: All
Section 28: All
Section 29: E½, E½SW¼
Section 32: E½, E½W½, W½SW¼
Section 33: All
Section 34: All
Referred to herein as the “Application Lands”
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 Beaver Creek Unit.
7. On November 20, 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. The Bureau of Land Management has requested the Commission include in its order a provision stating that the productive interval of each wellbore in the unit shall be no closer than 100 feet from the northern and southern unit boundaries, provided that if the Commission has not at the time of the drilling permit application established reciprocal setbacks for an adjacent parcel, then the treated interval of any wellbore in the Application Lands abutting such adjacent parcel shall be located no closer than 205 feet from the unit boundary abutting such parcel, unless the Director grants an exception.
9. 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 485 to 540 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. The drilling and spacing unit contains federal leased and/or unleased minerals. As such, SandRidge agrees to submit a Communitization Agreement (“CA”) to the Bureau of Land Management (“BLM”) for any existing wells within 60 days of the entry of this order. SandRidge also agrees to submit a CA to the BLM within 90 days from the date of first production (as defined in Commission Rules) from the initial well drilled within the exploratory drilling unit (or drilling and spacing unit).
13. Applicant agreed to be bound by oral order of the Commission.
14. 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 proposed Beaver Creek Federal Exploratory Unit, covering the lands described on the plat attached as Exhibit A (“Application Lands”), being lands in Townships 7 and 8 North, Range 81 West, 6th P.M., (“Beaver Creek Unit”) for production from the Niobrara Formation, Jackson County, Colorado.
ORDER
IT IS HEREBY ORDERED:
1. The setbacks for the Beaver Creek Unit are hereby modified such that the productive interval of any well within the Beaver Creek Unit should be no less than 100 feet from the boundaries of the Beaver Creek Unit when measured parallel to the orientation of the wellbore, and no less than 300 feet from the boundaries of the Beaver Creek Unit when measured perpendicular to the orientation of the wellbore, for production of the oil, gas, and associated hydrocarbons from the Niobrara Formation, unless an exception is granted by the Director.
2. The setbacks for the Beaver Creek Unit are hereby modified such that the productive interval of any well within the Beaver Creek Unit should be no less than 100 feet from the from the boundaries of any lease or mineral tract not committed to the Beaver Creek Unit 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 Beaver Creek Unit when measured perpendicular to the orientation of the wellbore, for production of the oil, gas, and associated hydrocarbons from the Niobrara Formation, unless an exception is 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 the Director grants an exception.
4. Any wellbore of any horizontal wells to be drilled under this Order may enter the Niobrara Formation anywhere within the unit, or on adjacent lands, unless the Director grants an exception.
5. For any permitted wells to be drilled under this Order for production from the Niobrara Formation, if the Commission has not at the time of the drilling permit application established reciprocal setbacks for a parcel adjacent to the Application Lands, then the treated interval of any wellbore in the Application Lands abutting such adjacent parcel shall be located no closer than 205 feet from the unit boundary abutting such parcel, 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 13th day of March, 2018, as of February 12, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By_______________________________________
Julie Spence Prine, Secretary