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

REPORT OF THE COMMISSION

The Commission heard this matter on January 7, 2013, at the Sheraton Denver Downtown Hotel, 1550 Court Place, Denver, Colorado, upon application for an order to approve up to two horizontal wells within an approximate 640-acre exploratory drilling and spacing unit established by Order 535-118 for Section 32, Township 4 South, Range 64 West, 6^th P.M., for the production of oil, gas, and related hydrocarbons of 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.         On January 23, 2012, the Commission entered Order 535-118 which, among other things, established an approximate 640-acre exploratory drilling and spacing unit, and approved one vertical exploratory well within the unit, with the option of one additional horizontal well to be either a recompletion of a vertical well or an entirely new well, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.  Section 32, Township 4 South, Range 64 West, 6^th P.M. is subject to this Order for the Niobrara Formation.

5.         October 31, 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 approve up to two horizontal wells within an approximate 640-acre exploratory 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 460 feet from the unit boundaries 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, 6^th P.M.

                                    Section 32:    All

6.         On December 19, 2012, ConocoPhillips, 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 submitted in support of the Application by Tami N. Hughes, Staff Landman for ConocoPhillips, showed that ConocoPhillips holds a mineral leasehold interest in the Application Lands

8.         Geologic testimony and exhibits submitted in support of the Application by Dennis P. Holler, Senior Geological Associate for MHA Petroleum Consultants for ConocoPhillips, showed that the Niobrara Formation exists under all of the Application Lands. Additional testimony showed that the total thickness of the Niobrara Formation under the Application Lands is 300 feet thick.

9.         Engineering testimony and exhibits submitted in support of the Application by John Seidle, Vice-President of MHA Petroleum Consultants, LLC for ConocoPhillips, showed the estimated ultimate recovery from horizontal wells in the Niobrara Formation within the Application Lands is 271 MBO.  Additional testimony showed that the calculated drainage area is expected to be 261-acres, with a recovery factor of 5%.  Testimony concluded the economics of the project are sound.

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.       ConocoPhillips 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 two horizontal wells within an approximate 640-acre exploratory drilling and spacing unit established by Order 535-118 for Section 32, Township 4 South, Range 64 West, 6^th P.M., for the production of oil, gas, and related hydrocarbons of the Niobrara Formation.

ORDER

NOW, THEREFORE IT IS ORDERED, that two horizontal wells within an approximate 640-acre exploratory drilling and spacing unit established by Order 535-118 for Section 32, Township 4 South, Range 64 West, 6^th P.M., are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the bottomhole locations not less than 600 feet from the boundary of the proposed drilling unit and not less than 460 feet from any other well or treated interval of a well producing from the Niobrara Formation, without exception being granted by the Director:

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

                                    Section 32:    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 January, 2013, as of January 7, 2013.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________         

                                                                                    Robert J. Frick, Secretary