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 IN THE UNNAMED FIELD, JACKSON COUNTY, COLORADO |
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CAUSE NO. 531
DOCKET NO. 171200878
TYPE: ADDITIONAL WELLS
ORDER NO. 531-58
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REPORT OF THE COMMISSION
The Commission heard this matter on March 19, 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to approve a total of up to nine horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 531-55 for portions of Sections 12 and 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. On July 15, 2008, the Commission entered Order No. 531-2 which, among other things, established approximate 640-acre drilling and spacing units and approved one horizontal well in each unit for certain lands in Townships 6 and 7 North, Ranges 80 and 81 West, 6th P.M., including the Application Lands, with the option to drill a second horizontal well, with a bottom hole location no closer than 600 feet from the boundaries of the unit, for production of 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 300 foot setbacks as to the unit boundaries of the drilling and spacing units established and/or modified by such orders, for the production of the oil, gas, and associated hydrocarbons from the Niobrara and Frontier Formations, modified various Orders to allow for 150 foot interwell setbacks, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, approved up to four horizontal wells within all approximate 480-acre and 640-acre drilling and spacing units established by various Orders for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and established four approximate 640-acre drilling and spacing units for Section 31, Township 8 North, Range 80 West, 6th P.M., and Sections 34, 35 and 36, Township 8 North, Range 81 West, 6th P.M., and approved up to four horizontal wells within each unit.
6. On September 14, 2015, the Commission entered Order No. 531-21 which, among other things, modified Order Nos. 531-2, only as to Section 13 of the Application Lands, to allow 300 foot setbacks as to the unit boundaries, modified Order Nos. 531-2, only as to Section 13 of the Application Lands, to allow for 150 foot interwell setbacks, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and approved up to four horizontal wells within the approximate 640-acre drilling and spacing units established by Order Nos. 531-2, only as to Section 13 of the Application Lands, for the Application Lands, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
7. On June 6, 2016, the Commission entered Order No. 531-28 which, among other things, authorized the drilling of four additional horizontal wells, for a total of eight horizontal wells, in each of two approximate 640-acre drilling and spacing units established by Order No. 531-2 for the Application Lands for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
8. On October 24, 2016, the Commission entered Order No. 531-41 which, among other things, modified 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 the Application Lands, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
9. On August 31, 2017, amended October 18, 2017, Applicant submitted an application in Docket No. 171000760 requesting an approximate 640-acre drilling and spacing unit for the Application Lands be established, and the drilling of up to eight horizontal wells within the proposed drilling and spacing unit be authorized, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, from no more than two well pads, with the treated intervals of the wellbores to be not less than 100 feet from the northern boundary of the drilling and spacing unit, not less than 300 feet from the remaining boundaries of the drilling and spacing unit, and not less than 150 feet from the treated interval of a well producing from the Niobrara Formation, unless an exception is granted by the Director. Because Hebron #3-12H Well is a producing well in Section 12 of the Application Lands, the application further requested the 640-acre exploratory drilling unit established by Order No. 531-2 be amended, modifed or vacated, only as to Section 12, Township 7 North, Range 81 West, 6th P.M., so as to ensure no additional wells are drilled pursuant to Order No. 531-2 in the Application Lands, that the Hebron #3-12H Well remain the only well drilled pursuant to Order No. 531-2 in the Application Lands, and production from the Hebron #3-12H Well continue to be allocated on a 640-acre basis.
10. On October 12, 2017, SandRidge, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to approve one additional horizontal well, for a total of up to nine horizontal wells, within an approximate 640-acre drilling and spacing unit established for the below-described lands (“Application Lands”), 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 100 feet from the northern boundary of the drilling and spacing unit, no closer than 300 feet from the remaining boundaries of the drilling and spacing unit, and no closer than 150 feet from the treated interval of a well producing from the Niobrara Formation, unless an exception is granted by the Director:
Township 7 North, Range 81 West, 6th P.M.
Section 12: W½
Section 13: W½
Applicant stated that any horizontal wells to be drilled under this Application will be drilled from no more than two multi-well pads, unless the Director grants an exception.
11. Application further stated that the wellbores will be oriented in a North/South direction.
12. 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.
13. Land testimony and exhibits submitted in support of the Application by Rick Silman, Landman for SandRidge, showed that both the surface and the mineral interest in the Application Lands is owned in fee, and that SandRidge owns a partial undivided leasehold ownership interest in the Application Lands.
14. 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 455 to 475 feet thick. Further testimony showed that the Niobrara Formation is a sequence of chalks and marls and is a common source of supply.
15. Engineering testimony and exhibits submitted in support of the Application by Wesley K. McAlister, Reservoir Engineer for SandRidge, showed that SandRidge is planning to drill up to nine horizontal wells in the Niobrara Formation. Engineering testimony further showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 40.26 acres and an approximate 640-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically, and effectively drained by nine horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation.
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 agreed to be bound by oral order of the Commission.
18. 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 approve a total of up to nine horizontal wells, within an approximate 640-acre drilling and spacing unit established by Order No. 531-55 for portions of Sections 12 and 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. A total of up to nine horizontal wells, within an approximate 640-acre drilling and spacing unit established by Order No. 531-55 the below-described lands 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 12: W½
Section 13: W½
2. The productive interval of the wellbore shall be located no closer than 100 feet from the northern boundary of the unit, no closer than 300 feet from the remaining boundaries of the unit, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless the Director grants an exception.
3. All wells permitted under this Order shall be drilled from no more than two multi-well pads within the Application Lands, unless the Director grants an exception.
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 18th day of April, 2018, as of March 19, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By_______________________________________
Julie Spence Prine, Secretary