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. 535
ORDER NO. 535-158
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REPORT OF THE COMMISSION
The Commission heard this matter on May 29, 2012, in Suite 801, The Chancery
Building, 1120 Lincoln Street, Denver, Colorado, upon application for an
order to establish ten approximate 640-acre drilling and spacing units for
Sections 22 and 26, Township 8 North, Range 65 West, 6th P.M.,
Section 9, Township 9 North, Range 63 West, 6th P.M., Sections 2, 4,
10, 11, 12 and 13, Township 9 North, Range 64 West, 6th P.M., and
Section 32, Township 9 North, Range 65 West, 6th P.M.,
and authorize drilling up to four 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.
Marathon Oil Company ("Marathon” 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.
Sections 22 and 26, Township 8 North, Range 65 West, 6th P.M.,
Section 9, Township 9 North, Range 63 West, 6th P.M., Sections 2, 4,
10, 11, 12 and 13, Township 9 North, Range 64 West, 6th P.M., and
Section 32, Township 9 North, Range 65 West, 6th P.M., are subject to
Rule 318.a., for the production of oil, gas and associated hydrocarbons from the
Niobrara Formation.
5.
On February 16, 2012 (Amended March 22, 2012), Marathon, by its
attorneys,
filed with the Commission pursuant to § 34-60-116 C.R.S., a verified amended
application (“Amended Application”) for an
order to: 1) establish five approximate 640-acre drilling and spacing units for
the below-described lands, and authorize drilling up to four horizontal wells
within each unit, for the production of oil, gas and associated hydrocarbons
from the Niobrara Formation, with the treated interval of the permitted
wellbore(s) to be located no closer than 600 feet from the boundaries of the
proposed units, without exception
being granted by the Director:
Township 8 North, Range 65 West, 6th P.M.
Section 22:
All
(DSU #1)
Section 26:
All
(DSU #2)
Township 9 North, Range 64 West, 6th P.M.
Section 4:
All
(DSU #3)
Section 10:
All
(DSU #4)
Township 9 North, Range 65 West, 6th P.M.
Section 32:
All
(DSU #5);
and 2) establish three approximate 1280-acre drilling and spacing units for the
below-described Application Lands, and authorize drilling up to four horizontal
wells within each unit, for the production of oil, gas and associated
hydrocarbons from the Niobrara Formation, with the treated interval of the
permitted wellbores to be located no closer than 600 feet from the boundaries of
the proposed units, without
exception being granted by the Director:
Collectively, the lands described above are referred to as the Application
Lands.
6.
On March 23, 2012, Marathon requested, and Commission Staff granted, a
continuance to the May 29, 2012 hearing.
7.
On May 15, 2012, Marathon, by its attorneys, filed with the Commission a
written request to approve the Amended Application based on the merits of the
verified Amended 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 Amended
Application by Tricia Clarke, Land Professional for Marathon, showed that the
Applicant has either partially or fully leased the mineral interests in each
section of the Application Lands, that the Application Lands are private fee
leases and that the interested parties received notice of the Amended
Application.
9.
Geologic testimony and exhibits submitted in support of the Amended
Application by Matthew Humphreys, Advanced Senior Geologist for Marathon, showed
that the Niobrara Formation underlies most of the DJ Basin in eastern Colorado,
southeastern Wyoming, and western Nebraska.
An isopach map of the Niobrara Formation showed total thickness of the
Niobrara Formation ranges from 270 to 340 feet in the Application Lands. A type log for the Niobrara Formation
showed that it consists of two members, the Smoky Hill Chalk and the Fort Hayes
Limestone. A stratigraphic
cross-section of the Application Lands showed the Niobrara Formation to be
consistent, continuous, and underlying all of the Application Lands as a common
source of supply.
10.
Engineering testimony and exhibits submitted in support of the Amended
Application by Tara Watson, Reservoir Engineer for Marathon, showed analysis of
a number of wells within the Application Lands demonstrated a range estimated
ultimate recovery ("EUR") values from 40 to 472 MBO; a range of original
oil-in-place ("OOIP"), from 794 to 9,446 MBO; and a drainage area ranging from
46 to 534-acres, with an average of 177-acres. The Silo field, north of the
Application Lands in southern Wyoming, is a major field producing from the
Niobrara Formation. EUR and
drainage estimates (which vary from 29 to 507-acres for horizontal wells) for
the Silo field were included in Applicant's engineering analysis. Additional testimony indicated
granting the proposed spacing application will result in efficient and economic
development of Application Lands.
11. The
above-referenced testimony and exhibits show that granting the Amended
Application will allow more efficient reservoir drainage, will prevent waste,
will assure a greater ultimate recovery of hydrocarbons, and will not violate
correlative rights.
12.
Marathon
agreed to be bound by oral order of the Commission.
13.
Based on the facts stated in the verified 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 five approximate 640-acre
drilling and spacing units and three approximate 1280-acre drilling and spacing
units for Sections 22 and 26, Township 8 North, Range 65 West, 6th
P.M., Sections 4 and 9, Township 9 North, Range 63 West, 6th P.M.,
Sections 4 and 10, Township 9 North, Range 64 West, 6th P.M., Section
32, Township 9 North, Range 65 West, 6th P.M., Sections 2 and 11,
Township 9 North, Range 64 West, 6th P.M., and Sections 12 and 13,
Township 9 North, Range 64 West, 6th P.M.,
and authorize drilling up to four 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 five
approximate 640-acre drilling and spacing units, are hereby established, for the
below-described lands, and up to four horizontal wells within each unit, are
hereby approved, for the production of oil, gas and associated hydrocarbons from
the Niobrara Formation, with the treated interval of the permitted wellbore(s)
to be located no closer than 600 feet from the boundaries of the proposed units, without exception being granted
by the Director:
Township 8 North, Range 65 West, 6th P.M.
Section 22:
All
(DSU #1)
Section 26:
All
(DSU #2)
Township 9 North, Range 64 West, 6th P.M.
Section 4:
All
(DSU #3)
Section 10:
All
(DSU #4)
Township 9 North, Range 65 West, 6th P.M.
Section 32:
All
(DSU #5);
IT IS FURTHER ORDERED, that three approximate 1280-acre drilling and
spacing units, are hereby established, for the below-described, and up to four
horizontal wells within each unit, are hereby approved, for the production of
oil, gas and associated hydrocarbons from the Niobrara Formation, with the
treated interval of the permitted wellbores to be located no closer than 600
feet from the boundaries of the proposed units, without exception being granted
by the Director:
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
4th
day of June, 2012, as of May 29, 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
June 4, 2012