BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

IN THE MATTER OF THE APPLICATION OF EE3 LLC FOR AN ORDER TO ESTABLISH TWO APPROXIMATE 640-ACRE DRILLING AND SPACING UNITS FOR SECTIONS 29 AND 32, TOWNSHIP 7 NORTH, RANGE 80 WEST, 6TH P.M. FOR THE FRONTIER FORMATION, UNNAMED FIELD, JACKSON COUNTY, COLORADO

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CAUSE NO. 531

 

DOCKET NO. 1309-SP-1155

 

ORDER NO. 531-9

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on December 16, 2013, at the Ralph L. Carr Colorado Judicial Center, 1300 Broadway, 1st Floor, Room 1E, Denver, Colorado, upon application for an order to establish two approximate 640-acre drilling and spacing units for Sections 29 and 32, Township 7 North, Range 80 West, 6th P.M., and approve up to three horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Frontier Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         EE3 LLC (“EE3” 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 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 29 and 32, Township 7 North, Range 80 West, 6th P.M. is subject to Rule 318.a. for the Frontier Formation.

 

5.         On July 18, 2013, EE3, by its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an order to establish two approximate 640-acre drilling and spacing units for the below-described lands (“Application Lands”) and approve up to three horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Frontier Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:

 

 

 

Township 7 North, Range 80 West, 6th P.M.

Section 29:      All                                            (DSU#1)

Section 32:      All                                            (DSU#2)

 

6.         On September 10, 2013, the Bureau of Land Management (“BLM”) filed a protest of the Application (“Protest”).  The BLM Protest centered on the active status of the Vaneta #1-32D Well (API No. 05-057-06467) in the Frontier Formation.

 

7.         On September 11, 2013, EE3 requested, and Commission staff granted, a continuance to the October 28, 2013 hearing.

 

8.         On October 11, 2013, EE3 requested, and Commission staff granted, a continuance to the December 16, 2013 hearing.

 

9.         On December 3, 2013, EE3 submitted a Form 5A, filed with the COGCC on May 29, 2013, demonstrating that EE3 abandoned the Frontier Formation for the Vaneta 1-32D Well.

 

10.       On December 3, 2013, the BLM withdrew its Protest to the Application.

 

11.       On December 3, 2013, EE3, 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.

 

12.       Land Testimony and exhibits submitted in support of the Application by Douglas C. Sandridge. Vice President of Land for EE3, showed the mineral ownership of the Section 29, Township 7 North, Range 80 West, 6th P.M. is held in fee and the mineral ownership in Section 32, Township 7 North, Range 80 West, 6th P.M consists of fee and federal minerals. Testimony concluded EE3 holds leasehold ownership in a substantial portion of DSU#1 and DSU#2.

 

            13.       Geologic testimony and exhibits submitted in support of the Application by Jeffrey Dynda, Geologist for EE3, showed the Frontier Formation is present throughout the Application Lands, and is generally of uniform thickness throughout the Application Lands.

14.       Engineering testimony and exhibits submitted in support of the Application by Richard F. McClure, President for EE3, showed that in DSU#1, the best vertical Frontier well in Jackson County has cumulative production of 32,569 barrels of oil and an estimated drainage area of approximately 27-acres and the estimated recovery from a horizontal well should approach 185,000 barrels with an estimated drainage area of 153-acres. Testimony further showed that in DSU#2, the best vertical Frontier well in Jackson County has cumulative production of 32,569 barrels of oil and an estimated drainage area of approximately 27-acres and the estimated recovery from a horizontal well should approach 185,000 barrels with an estimated drainage area of 153-acres.  Testimony concluded an azimuth of 20 Degrees East of North is the optimum wellbore orientation, and a 4,800’ lateral would allow for 3 wells per section.

 

15.       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.

 

16.       EE3 agreed to be bound by oral order of the Commission. 

 

17.       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 establish two approximate 640-acre drilling and spacing units for Sections 29 and 32, Township 7 North, Range 80 West, 6th P.M., and approve up to three horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Frontier Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Two approximate 640-acre drilling and spacing units for the below-described lands, are hereby established, and up to three horizontal wells within each unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Frontier Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:

 

Township 7 North, Range 80 West, 6th P.M.

Section 29:      All                                            (DSU#1)

Section 32:      All                                            (DSU#2)

 

IT IS FURTHER ORDERED:

 

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 30 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 _____ day of January, 2014, as of December 16, 2013.    

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary