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

REPORT OF THE COMMISSION

The Commission heard this matter on December 12, 2011, at the Weld County Administration Building, 1150 O Street, Greeley, Colorado 80631 upon application for an order to grant a well location exception to the requirements of Commission Rule 318.a. for certain lands in Sections 19 and 31, Township 3 South, Range 64 West, 6^th P.M., and Section 19, Township 3 South, Range 65 West, 6^th P.M., for the development and production of oil, gas and related hydrocarbons from the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1. Anadarko E & P Company LP (“Anadarko” 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, unless authorized by order of the Commission upon hearing.  The below-described lands are subject to Rule 318.a. for the Niobrara Formation:

Township 3 South, Range 64 West 6^th P.M.

Sections 19 and 31

Township 3 South, Range 65 West, 6^th P.M.

Section 19

                        5. Rule 318.c. of the Rules and Regulations of the Oil and Gas Conservation Commission states that the Director may grant an operator’s request for a well location exception to the requirements of Rule 318 or any order because of geologic, environmental, topographic or archaeological conditions, irregular sections, a surface owner request, or for other good cause shown provided that a waiver or consent signed by the lease owner toward whom the well location is proposed to be move, agreeing that said well may be located at the point at which the operator proposes to drill the well and where correlative rights are protected.  If the operator of the proposed well is also the operator of the drilling unit or unspaced offset lease toward which the well is proposed to be moved, waivers shall be obtained from the mineral interest owners under such lands.  If waivers cannot be obtained from all parties and no party objects to the location, the operator may apply for a variance under Rule 502.b.  If a party or parties object to a location and cannot reach an agreement, the operator may apply for a Commission hearing on the exception location.

6. On October 12, 2011, Anadarko, by its attorneys, filed with the Commission a verified application (“Application”) for an order to: 1) provide that the surface location for each horizontal well drilled within a given section of the below-listed lands (“Application Lands”) may be located anywhere within the section or on adjoining lands with appropriate surface owner approval;  2) the lateral of a given horizontal well may enter the Niobrara Formation no closer than 300 feet from the section line; 3) the treated interval within the Niobrara Formation may be located not closer than 460 feet from the section line; and 4) the distance between the treated interval of Niobrara wells within the Application Lands shall not be less than 920 feet;  for production of oil, gas, and other hydrocarbons from the Niobrara Formation:

Township 3 South, Range 64 West 6^th P.M.

Sections 19 and 31

Township 3 South, Range 65 West, 6^th P.M.

Section 19

7. On November 28, 2011, Anadrako 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. Land testimony and exhibits submitted in support of the Application by Enrique B. Nelson, Landman for Anadarko, stated that Anadarko is the owner of the mineral interests in the Application Lands.  Testimony stated that all interested parties received proper notice and that no protests or objections were received.

                        9. Engineering testimony and exhibits submitted in support of the Application by Robert A. King, a licensed Petroleum Engineer retained by Anadarko, compared 12 Niobrara horizontal type wells receiving fracture stimulation treatment similar to the planned Anadarko well.  Based on the type well characteristics, the quantity of sand and water used in fracture stimulation, and the geometry of a typical horizontal lateral configuration, the testimony calculated the average fracture half length of a Niobrara horizontal well completion within the Application lands would not exceed 325 feet from the lateral, with drainage no more than 460 feet from lateral.

10.  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.

11.  Anadarko agreed to be bound by oral order of the Commission. 

                        12.  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 grant a well location exception to the requirements of Commission Rule 318.a. for certain lands in Sections 19 and 31, Township 3 South, Range 64 West, 6^th P.M., and Section 19, Township 3 South, Range 65 West, 6^th P.M., for the development and production of oil, gas and related hydrocarbons from the Niobrara Formation.

ORDER

                        NOW, THEREFORE IT IS ORDERED, that a well location exception to the requirements of Commission Rule 318.a., is hereby granted for the below-listed lands:

Township 3 South, Range 64 West 6^th P.M.

Sections 19 and 31

Township 3 South, Range 65 West, 6^th P.M.

Section 19

                        IT IS FURTHER ORDERED,

1) the surface location for each horizontal well drilled within a given section of said lands may be located anywhere within the section or on adjoining lands with appropriate surface owner approval; 

2) the lateral of a given horizontal well may enter the Niobrara Formation no closer than 300 feet from the section line;

3) the treated interval within the Niobrara Formation may be located not closer than 460 feet from the section line; and

4) the distance between the treated interval of Niobrara wells within the Application Lands shall not be less than 920 feet;  for production of oil, gas, and other hydrocarbons from the Niobrara Formation.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.

                        IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

                        IT IS FURTHER ORDERED, that 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.

                        IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.

                        ENTERED this   16^th  day of December, 2011, as of December 12, 2011.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________         

                                                                                    Peter J. Gowen, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

December 16, 2011