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

 

IN THE MATTER OF THE APPLICATION OF CONOCOPHILLIPS COMPANY FOR AN ORDER ESTABLISHING TWO DRILLING AND SPACING UNITS LOCATED IN TOWNSHIP 4 SOUTH, RANGE 64 WEST, 6TH P.M. FOR THE NIOBRARA FORMATION, UNNAMED FIELD, ARAPAHOE COUNTY, COLORADO

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CAUSE NO. 535

 

ORDER NO. 535-203

DOCKET NO. 1208-SP-86

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on October 1, 2012, at the Routt County Justice Center, 1955 Shield Drive, Steamboat Springs, Colorado, upon application for an order to establish two approximate 640-acre drilling and spacing units established for Sections 12 and 14, Township 4 South, Range 64 West, 6th P.M., and approve up to two 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.         ConocoPhillips Company (“ConocoPhillips” 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.  Sections 12 and 14, Township 4 South, Range 64 West, 6th P.M. are subject to Rule 318.a. for the Niobrara Formation.

 

5.         On June 21, 2012, ConocoPhillips, by its attorneys, filed with the Commission pursuant to § 34-60-116 C.R.S., a verified application (“Application”) for an order to establish three approximate 640-acre drilling and spacing units for the below-described lands (“Application Lands”), and approve up to two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the horizontal wellbore to be located no closer than 460 feet from the boundaries of the unit, and no closer than 920 feet from any other producible or drilling oil or gas well, without exception being granted by the Director:

 

            Township 4 South, Range 64 West, 6th P.M.

            Section 12:    All

            Section 14:    All

            Section 22:    All

 

Applicant requested that the proposed well location rules apply to horizontal wells only, with vertical and directional wells in the Niobrara Formation remaining subject to Rule 318.a.

 

6.         On August 2, 2012, Renegade Oil & Gas Company, LLC ("Renegade" or “Protestant”) filed a protest of the Application, with respect to Section 22 only, but did not protest the Application with respect to Sections 12 or 14. 

 

7.         On August 31, 2012, in an attempt to resolve Renegade’s protest, ConocoPhillips filed a Second Amended Application ("Second Amended Application") which removed Section 22.  As a result, the Second Amended Application requested an order to establish only two approximate 640-acre drilling and spacing units for the below-described lands:

 

Township 4 South, Range 64 West, 6th P.M.

Section 12:    All

Section 14:    All

 

8.         On August 31, 2012, ConocoPhillips, by its attorneys, filed with the Commission a written request to approve the Second Amended Application based on the merits of the verified Second Amended Application and the supporting exhibits.  Sworn written testimony and exhibits were submitted in support of the Application.

 

9.         On September 6, 2012, Renegade, by its attorneys, withdrew its Protest in the matter.

 

10.       Land testimony and exhibits submitted in support of the Second Amended Application by Tami N. Hughes, Staff Landman Exploration for ConocoPhillips, showed that ConocoPhillips holds oil and gas leasehold interests in the Application Lands.

 

11.       Geologic testimony and exhibits submitted in support of the Second Amended Application by Dennis P. Holler, Senior Geological Associate of MHA Petroleum Consultants, LLC for ConocoPhillips, showed the Niobrara Formation underlying the Application lands is just over 300 feet thick, and is expected to be similar to that encountered in nearby lands which have been spaced on 640-acres for production from horizontal wells to the Niobrara Formation.

 

12.       Engineering testimony and exhibits submitted in support of the Second Amended Application by John Siedle, Vice-President of MHA Petroleum Consultants, LLC for ConocoPhillips, further showed that the estimated ultimate recovery (EUR) from horizontal wells in the Niobrara Formation within the Application Lands is 270,779 barrels of oil. Further, the calculated drainage area for a horizontal well to the Niobrara Formation in the Application lands is expected to be 261-acres, with a recovery factor of 5 percent. If a second well is drilled, total draining area from both wells is calculated to be approximately 522-acres. Additional testimony concluded that granting the proposed spacing application will result in efficient and economic development of Application Lands.

 

13.       The above-referenced testimony and exhibits show that granting the Second 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.

 

14.       ConocoPhillips agreed to be bound by oral order of the Commission. 

 

15.       Based on the facts stated in the verified Second Amended Application, having received no protests, and based on the Hearings Officer review of the Second Amended Application under Rule 511, the Commission should enter an order to establish two approximate 640-acre drilling and spacing units, and approve up to two horizontal wells within each unit, for Sections 12 and 14, Township 4 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that two approximate 640-acre drilling and spacing units for the below-described lands, are hereby established, and up to two 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 horizontal wellbore to be no closer than 460 feet from the boundaries of the unit, and no closer than 920 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

 

            Township 4 South, Range 64 West, 6th P.M.

            Section 12:    All

            Section 14:    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 October, 2012, as of October 1, 2012.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________         

                                                                                    Robert J. Frick, Secretary