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 THE WATTENBERG FIELD AND AN UNNAMED FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407 & 535
ORDER NO. 407-514 & 535-104
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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: 1) establish three approximate 1,280-acre drilling and spacing units for lands in Sections 2 and 11, Township 7 North, Range 60 West, 6th P.M.; Sections 27 and 34, Township 2 North, Range 63 West, 6th P.M.; and Sections 13 and 24, Township 2 North, Range 64 West, 6th P.M.; 2) establish seven approximate 640-acre drilling and spacing units for lands in Section 19, Township 11 North, Range 58 West, 6th P.M.; Sections 1 and 5, Township 7 North, Range 60 West, 6th P.M.; Section 31, Township 6 North, Range 61 West, 6th P.M.; Section 21, Township 7 North, Range 61 West, 6th P.M.; Section 11, Township 7 North, Range 62 West, 6th P.M.; and Section 12, Township 1 North, Range 64 West, 6th P.M.; and 3) approve one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1. Continental Resources, Inc. (“Continental” 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 December 19, 1983, the Commission issued Order No. 407-1 (amended on March 29, 2000 in accordance with Order No. 407-17, entered November 18, 1985), which among other things, established 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Codell Formation underlying certain lands, with the drilling and spacing unit to be designated by the operator drilling the first well in the quarter section, (or the Director, if the operator fails to designate). The permitted well shall be located in the center of either 40-acre tract within the drilling and spacing unit with a tolerance of 200 feet in any direction. The operator shall have the option to drill an additional well on the undrilled 40-acre tract in each 80-acre drilling and spacing unit. The following lands are subject to this Order:
Township 1 North, Range 64 West, 6th P.M.
Section 12
Township 2 North, Range 64 West, 6th P.M.
Sections 13 and 24
5. On February 19, 1992, the Commission issued Order No. 407-87 (amended August 20, 1993), which among other things, established 80-acre drilling and spacing units for the production of oil and/or gas from the Codell and Niobrara Formations underlying certain lands. The below-described lands are subject to this Order, with the permitted well locations in accordance with the provisions of Order No. 407-1. The following lands are subject to this Order:
Township 1 North, Range 64 West, 6th P.M.
Section 12
Township 2 North, Range 64 West, 6th P.M.
Sections 13 and 24
6. 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. The following lands are unspaced as to the Niobrara Formation and are subject to this Rule:
Township 7 North, Range 60 West, 6th P.M.
Sections 1, 2, 5 and 11
Township 11 North, Range 58 West, 6th P.M.
Section 19
7. 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 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 64 West, 6th P.M.
Section 12
Township 2 North, Range 63 West, 6th P.M.
Sections 27 and 34
Township 2 North, Range 64 West, 6th P.M.
Sections 13 and 24
Township 6 North, Range 61 West, 6th P.M.
Section 31
Township 7 North, Range 61 West, 6th P.M.
Section 21
Township 7 North, Range 62 West, 6th P.M.
Section 11
8. On October 13, 2011, Continental, by its attorneys, filed with the Commission a verified application (the “Application”) for an order to: 1) establish three approximate 1,280-acre drilling and spacing units for lands in Sections 2 and 11, Township 7 North, Range 60 West, 6th P.M.; Sections 27 and 34, Township 2 North, Range 63 West, 6th P.M.; and Sections 13 and 24, Township 2 North, Range 64 West, 6th P.M.; 2) establish seven approximate 640-acre drilling and spacing units for lands in Section 19, Township 11 North, Range 58 West, 6th P.M.; Sections 1 and 5, Township 7 North, Range 60 West, 6th P.M.; Section 31, Township 6 North, Range 61 West, 6th P.M.; Section 21, Township 7 North, Range 61 West, 6th P.M.; Section 11, Township 7 North, Range 62 West, 6th P.M.; and Section 12, Township 1 North, Range 64 West, 6th P.M.; and 3) approve one horizontal well within each unit, regardless of lease lines 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 on the surface anywhere within the proposed unit and the treated interval of the wellbore for the permitted well to be no closer than 600 feet from the unit boundaries, for lands subject to Rule 318.a., and no closer than 460 feet from the unit boundaries for lands subject to Rule 318A, without exception being granted by the Director. The Application will not modify 80-acre spacing under Order No. 407-1 and Order No. 407-87 for vertical wells for the following lands within the Application Lands:
Township 1 North, Range 64 West, 6th P.M.
Section 12
Township 2 North, Range 64 West, 6th P.M.
Sections 13 and 24
9. On November 28, 2011, Continental, 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.
10. Land Testimony and exhibits submitted in support of the Application by Michael D. Schooley, Landman for Continental, showed all interested parties received notice of the Application.
11. Geologic testimony and exhibits submitted in support of the Application by Ola K. Adisa, Geologist for Continental, showed the Niobrara formation exists under all lands in the proposed spacing units.
12. Engineering testimony and exhibits submitted in support of the Application by Archie Taylor, Engineer for Continental, compared drainage estimates from recent horizontal wells in Weld County (377-acres) and the Silo field (270-acres). Testimony concluded horizontal wells in the 640 and 1280-acre spacing units would drain less than 640 and 1280-acres, respectively.
13. 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.
14. 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.
15. Continental agreed to be bound by oral order of the Commission.
16. 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: 1) establish three approximate 1,280-acre drilling and spacing units for lands in Sections 2 and 11, Township 7 North, Range 60 West, 6th P.M.; Sections 27 and 34, Township 2 North, Range 63 West, 6th P.M.; and Sections 13 and 24, Township 2 North, Range 64 West, 6th P.M.; 2) establish seven approximate 640-acre drilling and spacing units for lands in Section 19, Township 11 North, Range 58 West, 6th P.M.; Sections 1 and 5, Township 7 North, Range 60 West, 6th P.M.; Section 31, Township 6 North, Range 61 West, 6th P.M.; Section 21, Township 7 North, Range 61 West, 6th P.M.; Section 11, Township 7 North, Range 62 West, 6th P.M.; and Section 12, Township 1 North, Range 64 West, 6th P.M.; and 3) approve one horizontal well within each unit, regardless of lease lines 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 on the surface anywhere within the proposed unit and the treated interval of the wellbore for the permitted well to be no closer than 600 feet from the unit boundaries, for lands subject to Rule 318.a., and no closer than 460 feet from the unit boundaries for lands subject to Rule 318A, without exception being granted by the Director.
ORDER
NOW, THEREFORE IT IS ORDERED, that three approximate 1,280-acre drilling and spacing units, are hereby established, for the below-listed lands:
Township 7 North, Range 60 West, 6th P.M.
Sections 2 and 11
Township 2 North, Range 63 West, 6th P.M.
Sections 27 and 34
Township 2 North, Range 64 West, 6th P.M.
Sections 13 and 24;
IT IS FURTHER ORDERED, that seven approximate 640-acre drilling and spacing units, are hereby established, for the below-listed lands:
Township 11 North, Range 58 West, 6th P.M.
Section 19
Township 7 North, Range 60 West, 6th P.M.
Sections 1 and 5
Township 6 North, Range 61 West, 6th P.M.
Section 31
Township 7 North, Range 61 West, 6th P.M.
Section 21
Township 7 North, Range 62 West, 6th P.M.
Section 11
Township 1 North, Range 64 West, 6th P.M.
Section 12;
IT IS FURTHER ORDERED, that one horizontal well within each unit, is hereby approved, regardless of lease lines 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 on the surface anywhere within the proposed unit and the treated interval of the wellbore for the permitted well to be no closer than 600 feet from the unit boundaries, for lands subject to Rule 318.a., and no closer than 460 feet from the unit boundaries for lands subject to Rule 318A, without exception being granted by the Director.
IT IS FURTHER ORDERED, that this Order will not modify 80-acre spacing under Order No. 407-1 and Order No. 407-87 for vertical wells for the following lands within the Application Lands:
Township 1 North, Range 64 West, 6th P.M.
Section 12
Township 2 North, Range 64 West, 6th P.M.
Sections 13 and 24
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