BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

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 three additional horizontal wells (for a total of seven) in an approximate 640-acre drilling and spacing unit established for Section 2, Township 9 North, Range 59 West, 6^th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.         Whiting Oil and Gas Corporation (“Whiting” 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 September 19, 2011, the Commission issued Order No. 535-75 which, among other things, established four approximate 640-acre drilling and spacing units, and approved 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 wellbore for the permitted well to be no closer than 600 feet from the unit boundaries.  Section 2, Township 9 North, Range 59 West, 6^th P.M. is subject to this Order for the Niobrara Formation.

5.         On June 20, 2012, Whiting, 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 three additional horizontal wells (for a total of seven) in an approximate 640-acre drilling and spacing unit established for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries and no closer than 460 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

Township 9 North, Range 59 West, 6^th P.M.

Section 2:        All

6.         On August 9, 2012, pursuant to Rule 511.d., an Administrative Hearing was held at the COGCC Offices in Denver, Colorado.  As a matter of first impression before the Commission, Whiting requested an Administrative Hearing to detail its plans to drill additional horizontal wells into separate hydrocarbon bearing benches within the Niobrara Formation.  Whiting Staff presented the 511 testimony submitted in support of the Application to COGCC Engineering, Permitting, and Hearings Unit Staff. 

7.         On August 10, 2012, Whiting, 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.

8.         Land testimony and exhibits submitted in support of the Application by Scott McDaniel, Regional Land Manager for Whiting, showed Whiting is the majority leaseholder in the Application Lands, and that the lands are in the immediate vicinity of other Niobrara Formation wells that have been drilled, tested and completed.

9.         Geologic testimony and exhibits submitted in support of the Application by Mark K. Odegard, Staff Geologist for Whiting, included an analysis of a cross-section of the Niobrara Formation from a nearby type well, showing the thickness of the Niobrara to be approximately 320 feet.  Testimony showed the Niobrara Formation in the Application Lands consists of three separate and distinct hydrocarbon bearing benches, labeled as the Niobrara “A”, “B” and “C”.  Testimony concluded the Niobrara “A” and “B” benches are separated by 63 feet of detrital bentonites, preventing communication between the separate layers, requiring additional wellbores to access the Niobrara “A” reserves.

10.       Engineering testimony and exhibits submitted in support of the Application by Ralph Nelms, Senior Reservoir Engineer for Whiting, included an analysis of reservoir characteristics of the Niobrara Formation.  Volumetric calculation showed the estimated oil recovery (“EUR”) from a well drilled and completed in the Niobrara Formation to be approximately 151 MBO.  The economic analysis from a horizontal well previously drilled and completed in the Niobrara Formation on the Application Lands, concluded favorable economics for the wells proposed in the Application.

11.       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.

12.       Whiting 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 Application under Rule 511., the Commission should enter an order to approve up to three additional horizontal wells (for a total of seven) in an approximate 640-acre drilling and spacing unit established for Section 2, Township 9 North, Range 59 West, 6^th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

ORDER

NOW, THEREFORE IT IS ORDERED, that up to seven horizontal wells within an approximate 640-acre drilling and spacing unit established for the below-described lands, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries and no closer than 460 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

            Township 9 North, Range 59 West, 6^th P.M.

            Section 2:        All

IT IS FURTHER ORDERED, that all other provisions of Order No. 535-75 remain unaffected by this Order.

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