BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN AN UNNAMED FIELD, |
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CAUSE NO. 535 ORDER NO. 535-122 |
REPORT OF THE COMMISSION
The Commission heard this matter on January 23, 2012, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, upon application for an order to establish an approximate 640-acre exploratory drilling unit for Section 27, Township 11 North, Range 61 West, 6th P.M., and authorize drilling one or more horizontal wells and one or more vertical wells within said exploratory drilling unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
FINDINGS
The Commission finds as follows:
1. Noble Energy, Inc. (“Noble” 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. Section 27, Township 11 North, Range 61 West, 6th P.M. is subject to Rule 318.a. for the Codell and Niobrara Formations.
5. On November 23, 2011, Noble, by its attorneys, filed with the Commission a verified application (“Application”) for an to: 1) establish an approximate 640-acre drilling and spacing unit for the below-listed lands (“Application Lands”), and approve one or more horizontal wells and one or more vertical wells within said unit, as necessary to economically and efficiently recover the oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the treated interval of any permitted well to be no closer than 600 feet from the boundaries of said unit and the interwell distance between the treated intervals of any permitted well to be no closer than 150 feet; and 2) authorize the surface location for any permitted well under the Application to be located anywhere within said unit or on surrounding lands:
Township 11 North, Range 61 West, 6th P.M.
Section 27: All
Further, Applicant requested that the the Bill #12-27 (API No. 05-123-25559), the Fabrizius 1161-27-12 (API No. 05-123-30032), Fabrizius 1161-27-14 (API No. 05-123-30970), Fabrizius 1161-27-22 (API No. 05-123-30033), Fabrizius 1161-27-34 (API No. 05-123-29926), Fabrizius 1161-27-42 (API No. 05-123-30049), and the Fabrizius 1161-27-44 (API No. 05-123-30300) (collectively the “Wells”), existing vertical wells drilled and completed to the J-Sand Formation, be excluded from the unit established under the Application for the Application Lands, and that the distribution of proceeds from the Wells be unaltered. Applicant confirmed that it will not change the established distribution of proceeds for any existing vertical J-Sand Formation wells within the unit.
6. On January 9, 2012, Noble, 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.
7. Land testimony and exhibits submitted in support of the Application by Julie T. Jenkins, Land Manager for Noble, showed that Noble owns 100 percent of the leasehold interests in the Application Lands.
8. Geologic testimony and exhibits submitted in support of the Application by Ron Pritchett, Senior Geologist for Noble, indicates that the Codell and Niobrara Formations underlie the entirety of the Application Lands and has an approximate total thickness that ranges from 16 to 23 feet for the Codell Formation and 265 to 311 feet for the Niobrara Formation. Additional testimony showed that the Codell and Niobrara Formations are common sources of supply for the Application Lands.
9. Engineering testimony and exhibits submitted in support of the Application by Ryan Sullivan, Engineering Team Lead for Noble, indicate that the first and each subsequent horizontal well would increase the recovery factor of hydrocarbons in the Application Lands to 1.3 percent, and that vertical wells would likewise increase the recovery factor, but at a much greater well density. Testimony further indicated that infill horizontal and vertical wells will increase recovery from the reservoir, preventing waste and protecting correlative rights.
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. On January 18, 2012, Noble submitted an Amended Application for an order to: 1) establish an approximate 640-acre exploratory drilling unit for the Application Lands, and approve one or more horizontal wells and one or more vertical wells within said exploratory drilling unit, as necessary to economically and efficiently recover the oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, minimize surface impacts, create efficiencies for drilling and production, and to increase the ultimate recovery of oil or gas from these Formations, with the treated interval of any permitted well to be no closer than 600 feet from the boundaries of said exploratory drilling unit and not less than 150 feet from another well or treated interval of a well; and 2) authorize the surface location of four wells per quarter section, with wells on each pad to be drilled within 50 feet of an adjacent well, without exception being granted by the Director. Applicant further stated that it will minimize surface impacts to the extent reasonably technically feasible and economically practicable.
12. 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 January 6, 2012, the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any additional conditions of approval are necessary for approving the amended Application.
13. Noble agreed to be bound by oral order of the Commission.
14. Based on the facts stated in the verified Amended Application, having received no protests, and based on the Hearing Officer review of the Amended Application under Rule 511., the Commission should enter an order to establish an approximate 640-acre exploratory drilling unit for Section 27, Township 11 North, Range 61 West, 6th P.M., and authorize drilling one or more horizontal wells and one or more vertical wells within said exploratory drilling unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
ORDER
NOW, THEREFORE IT IS ORDERED, that an approximate 640-acre exploratory drilling unit for the below-listed lands is hereby established, and the drilling of one or more horizontal wells and one or more vertical wells within said exploratory drilling unit is authorized, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations:
Township 11 North, Range 61 West, 6th P.M.
Section 27: All
IT IS FURTHER ORDERED, that the treated interval of any permitted well shall be located no closer than 600 feet from the boundaries of said exploratory drilling unit and not less than 150 feet from another well or treated interval of a well.
IT IS FURTHER ORDERED, that absent a showing of good cause, which shall include surface owner consent, wells to be drilled in the exploratory drilling unit, whether horizontal, vertical or directional, shall be drilled from no more than four well pads per quarter section, with wells on each pad to be drilled within 50 feet of an adjacent well.
IT IS FURTHER ORDERED that the Bill #12-27 (API No. 05-123-25559), the Fabrizius 1161-27-12 (API No. 05-123-30032), Fabrizius 1161-27-14 (API No. 05-123-30970), Fabrizius 1161-27-22 (API No. 05-123-30033), Fabrizius 1161-27-34 (API No. 05-123-29926), Fabrizius 1161-27-42 (API No. 05-123-30049), and the Fabrizius 1161-27-44 (API No. 05-123-30300) (collectively the “Wells”), existing vertical wells that have been drilled and completed to the J-Sand Formation within the established exploratory drilling unit, be excluded from the established exploratory drilling unit and that the distribution of proceeds from the Wells shall not be changed.
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 26th day of January, 2012, as of January 23, 2012.
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
January 26, 2012