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,
WELD COUNTY, COLORADO |
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CAUSE NO. 535
ORDER NO. 535-193
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REPORT OF THE COMMISSION
The Commission heard this matter on August 20, 2012, at the offices of the
Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver,
Colorado, upon application for an order to approve up to four horizontal wells
within each of three approximate 640-acre drilling and spacing units established
for Sections 18, 19 and 29, Township 9 North, Range 57 West, 6th
P.M., 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.
On June 27, 2011, the Commission issued Order No. 535-42 which, among
other things, established eight approximate 640-acre drilling and spacing units,
and approved one horizontal well within each unit, for the production of oil,
gas and associated hydrocarbons from the Niobrara Formation, with the treated
interval of the wellbore for the permitted well to be no closer than 600 feet
from the unit boundaries. Sections
18, 19 and 29, Township 9 North, Range 57 West, 6th P.M. are subject
to this Order for the Niobrara Formation.
5.
On June 21, 2012, Marathon, by its attorneys, filed with the Commission
pursuant to § 34-60-116 C.R.S., a verified application (“Application”) for an
order to approve up to four horizontal wells within each of three approximate
640-acre drilling and spacing units established for the below-described lands
(“Application Lands”), for the production of oil, gas and associated
hydrocarbons from the Niobrara Formation, with the surface locations to be
located anywhere within the unit and the treated interval of the wellbore to be
located no closer than 600 feet from the unit boundaries and no closer than
1,200 feet from the treated interval of any other wellbore located in the unit,
without exception being granted by the Director:
Township 9 North, Range 57 West, 6th P.M.
Section 18:
All
Section 19:
All
Section 29:
All
6.
On August 7, 2012, Marathon, 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 in support of the Application by Tricia Clarke, Land
Professional for Marathon, showed that the Applicant has partially leased the
mineral interests in the Application Lands, that the Application Lands are
private fee leases and that the interested parties received notice of the
Application.
8.
Geologic testimony and exhibits submitted in support of the 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 290 to 310 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 the
Application Lands as a common source of supply.
9.
Engineering testimony and exhibits submitted in support of the
Application by Tara Watson, Reservoir Engineer for Marathon, showed estimated
ultimate recovery (“EUR”) values from 40 to 472 MBO; and a drainage area ranging
from 46 to 534-acres, with an average of 177-acres. EUR and drainage estimates
(which vary from 31 to 504-acres for horizontal wells) for the analogous Silo
field were included in Applicant’s engineering analysis. Testimony concluded granting the
proposed spacing application will result in efficient and economic development
of Application Lands.
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.
Marathon 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 approve up to four horizontal
wells within each of three approximate 640-acre drilling and spacing units
established for Sections 18, 19 and 29, Township 9 North, Range 57 West, 6th
P.M., for the production of oil, gas and associated hydrocarbons from the
Niobrara Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that up to four horizontal wells within each of
three approximate 640-acre drilling and spacing units established for the
below-described lands, are hereby approved, for the production of oil, gas and
associated hydrocarbons from the Niobrara Formation, with the surface locations
to be located anywhere within the unit and the treated interval of the wellbore
to be located no closer than 600 feet from the unit boundaries and no closer
than 1,200 feet from the treated interval of any other wellbore located in the
unit, without exception being granted by the Director:
Township 9 North, Range 57 West, 6th P.M.
Section 18:
All
Section 19:
All
Section 29:
All
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
day of August, 2012, as of
August 20, 2012.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary
Dated: August 30, 2012