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