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 IN AN UNNAMED FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407 & 535
ORDER NO. 407-528 & 535-103
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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 establish 51 approximate 640-acre drilling and spacing units for lands in Townships 1, 2, 3, 4, and 7 North, Ranges 61, 62 and 63 West, 6th P.M., Weld County, Colorado and approve two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1. Chesapeake Explorations, LLC (“Chesapeake” 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 April 27, 1998, the Commission adopted Rule 318A., which, among other things, allowed certain drilling locations to be utilized to drill or twin a well, deepen a well or recomplete a well and to commingle any or all of the Cretaceous Age Formations from the base of the Dakota Formation to the surface. Pursuant to Rule 318A.j., Rule 318A. supersedes all prior Commission drilling and spacing orders affecting well location and density requirements of Greater Wattenberg Area (“GWA”) wells. Rule 318A.d. provides that an operator may allocate production to any drilling and spacing unit with respect to a particular Cretaceous Age Formation consistent with the provisions of Rule 318A. The below-described lands are subject to Rule 318A., for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formation:
Township 1 North, Range 61 West, 6th P.M.
Sections 2, 3, 14, 15, 16, 17, 20, 25, 34, and 35
Township 1 North, Range 62 West, 6th P.M.
Sections 2, 3, 5, 10, 14, and 18
Township 2 North, Range 61 West, 6th P.M.
Sections 1, 3, 11, 15, 19, 26, 27, and 35
Township 2 North, Range 62 West , 6th P.M.
Sections 11, 13, 21, 22, 23, and 32
Township 3 North, Range 61 West, 6th P.M.
Sections 10, 14, 15, 21, 22, 23, 26, 27, 28, 32, 33, and 35
Township 3 North, Range 62 West, 6th P.M.
Sections 30, and 31
Township 3 North, Range 63 West, 6th P.M.
Sections 22, 24, 26, and 34
Township 4 North, Range 63 West, 6th P.M.
Sections 10, and 14
Township 7 North, Range 62 West, 6th P.M.
Sections 16, 25, and 36
Township 7 North, Range 63 West, 6th P.M.
Sections 26 and 28
5. On June 27, 2011, the Commission entered Order No. 535-44, which among other things, established approximate 640-acre drilling and spacing units for certain lands, and approved one horizontal well within each unit, including Section 22, Township 3 North, Range 63 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
6. On October 13, 2011, Chesapeake, by its attorneys, filed with the Commission a verified application (“Application”) for an order to establish 55 approximate 640-acre drilling and spacing units for the below-listed lands (“Application Lands”), and approve two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the surface location of the permitted well to be located within authorized GWA drilling windows, with the treated interval of the wellbore for the permitted well to be no closer than 460 feet from the unit boundaries, without exception being granted by the Director:
Township 1 North, Range 61 West, 6th P.M.
Sections 2, 3, 14, 15, 16, 17, 20, 25, 34, and 35
Township 1 North, Range 62 West, 6th P.M.
Sections 2, 3, 5, 10, 14, and 18
Township 2 North, Range 61 West, 6th P.M.
Sections 1, 3, 11, 15, 19, 26, 27, and 35
Township 2 North, Range 62 West , 6th P.M.
Sections 11, 13, 21, 22, 23, and 32
Township 3 North, Range 61 West, 6th P.M.
Sections 10, 14, 15, 21, 22, 23, 26, 27, 28, 32, 33, and 35
Township 3 North, Range 62 West, 6th P.M.
Sections 30 and 31
Township 3 North, Range 63 West, 6th P.M.
Sections 22, 24, 26, and 34
Township 4 North, Range 63 West, 6th P.M.
Sections 10 and 14
Township 7 North, Range 62 West, 6th P.M.
Sections 16, 25, and 36
Township 7 North, Range 63 West, 6th P.M.
Sections 26 and 28
7. On October 31, 2011, the Commission entered Order No. 407-501, which among other things, established 12 approximate 640-acre drilling and spacing units for certain lands, and approved one horizontal well within each unit, including Section 25, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
8. On November 16, 2011, Chesapeake, by its attorneys, withdrew Section 35, Township 1 North, Range 61 West, 6th P.M., Section 5, Township 1 North, Range 62 West, 6th P.M., and Section 24, Township 3 North, Range 63 West, 6th P.M. from the Application Lands.
9. On November 22, 2011, a protest was filed by Petroleum Development Corporation (“PDC”) with regard to Section 26, Township 7 North, Range 63 West, 6th P.M. only. PDC and Chesapeake agreed to bifurcate Section 26, Township 7 North, Range 63 West, 6th P.M. from the Application and proceed with the remaining Application Lands as an uncontested Rule 511 matter. Section 26, Township 7 North, Range 63 West, 6th P.M. was continued to the January 23, 2012 Commission hearing.
10. On November 28, 2011, Chesapeake, 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.
11. Land testimony and exhibits submitted in support of the Application by Nick Watkins, District Landman for Chesapeake, showed Chesapeake owns a leasehold interest in the Application Lands, and that all interested parties received notice of the Application.
12. Geologic Testimony and exhibits submitted in support of the Application by Ryan C. Sonntag, Associate Geologist for Chesapeake, concluded the Niobrara Formation exists under all Application Lands with a total thickness of 200-400 feet.
13. Engineering testimony and exhibits submitted in support of the Application by Keeley Cuccio, Associate Reservoir Engineer for Chesapeake, showed horizontal type wells drained an average of 227 acres. Testimony concluded that the proposed 640-acre spacing units are not smaller than the maximum area that can be efficiently drained.
14. 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.
15. The Application was reviewed by the Colorado Department of Public Health and Environment (“CDPHE”) pursuant to consultation provisions of Rule 306.d. In a letter dated December 1, 2011, the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any additional conditions of approval are necessary for approving the amended Application.
16. Chesapeake agreed to be bound by oral order of the Commission.
17. 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 establish 51 approximate 640-acre drilling and spacing units for lands in Townships 1, 2, 3, 4, and 7 North, Ranges 61, 62 and 63 West, 6th P.M., Weld County, Colorado and approve two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that 51 approximate 640-acre drilling and spacing units, are hereby established, for the below-listed lands (“Application Lands”), and two horizontal wells within each unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the surface location of the permitted well to be located within authorized GWA drilling windows, with the treated interval of the wellbore for the permitted well to be no closer than 460 feet from the unit boundaries, without exception being granted by the Director:
Township 1 North, Range 61 West, 6th P.M.
Sections 2, 3, 14, 15, 16, 17, 20, 25, and 34
Township 1 North, Range 62 West, 6th P.M.
Sections 2, 3, 10, 14, and 18
Township 2 North, Range 61 West, 6th P.M.
Sections 1, 3, 11, 15, 19, 26, 27, and 35
Township 2 North, Range 62 West , 6th P.M.
Sections 11, 13, 21, 22, 23, and 32
Township 3 North, Range 61 West, 6th P.M.
Sections 10, 14, 15, 21, 22, 23, 26, 27, 28, 32, 33, and 35
Township 3 North, Range 62 West, 6th P.M.
Sections 30 and 31
Township 3 North, Range 63 West, 6th P.M.
Sections 22, 26, and 34
Township 4 North, Range 63 West, 6th P.M.
Sections 10 and 14
Township 7 North, Range 62 West, 6th P.M.
Sections 16, 25, and 36
Township 7 North, Range 63 West, 6th P.M.
Section 28
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 16th 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