BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF CONOCOPHILLIPS COMPANY FOR AN ORDER TO
ESTABLISH FOUR APPROXIMATE 640-ACRE DRILLING AND SPACING UNITS AND APPROVE UP TO
TWO HORIZONTAL WELLS WITHIN EACH UNIT FOR SECTIONS 8 AND 28, TOWNSHIP 4 SOUTH,
RANGE 63 WEST, 6TH P.M., SECTION 2, TOWNSHIP 4 SOUTH, RANGE 64 WEST,
6TH P.M., AND SECTION 2, TOWNSHIP 5 SOUTH, RANGE 64 WEST, 6TH
P.M., FOR THE NIOBRARA FORMATION, UNNAMED FIELD, ARAPAHOE COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 1301-SP-07
ORDER NO. 535-246
AMENDED
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AMENDED
REPORT OF THE COMMISSION
The Commission heard this matter on March 25, 2013, at the
1120 Lincoln Street, Suite 801, Denver, Colorado,
upon application for an order to establish four approximate 640-acre
drilling and spacing units for Sections 8 and 28,
Township 4 South, Range 63 West, 6th
P.M., Section 2, Township 4 South, Range 64 West, 6th P.M., and
Section 2, Township 5 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”), 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 8 and 28,
Township 4 South, Range 63 West, 6th
P.M., Section 2, Township 4 South, Range 64 West, 6th P.M., and
Section 2, Township 5 South, Range 64 West, 6th P.M. are subject to
this Rule for the Niobrara Formation.
5.
On November 2,
2012, ConocoPhillips Company ("ConocoPhillips" or “Applicant”), by its
attorneys, filed with the Commission pursuant to § 34-60-116 C.R.S., a verified
application (“Application”) for an order to establish four 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 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 63 West, 6th P.M.
Section 8:
All
(“DSU #1)
Township 4 South, Range 63 West, 6th P.M.
Section 28:
All
(“DSU #2)
Township 4 South, Range 64 West, 6th P.M.
Section 2:
All
(“DSU #3)
Township 5 South, Range 64 West, 6th P.M.
Section 2:
All
(“DSU #4)
6.
On December 19,
2012, ConocoPhillips, by its attorneys,
filed with the Commission a written request to approve the Application based on
its 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 Carson Buckles, 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.
On January 7,
2013, the Commission entered Order No. 535-246 which established four
approximate 640-acre drilling and spacing units for the Application Lands, and
approved up to two horizontal wells within each unit, for the production of oil,
gas and associated hydrocarbons from the Niobrara Formation. The Order, however,
was silent as to whether vertical and directional wells to the Niobrara
Formation would remain subject to Commission Rule 318.a. or other such orders as
may be entered by the Commission.
11.
On February 20,
2013, ConocoPhillips, by its attorneys, filed with the Commission a Request to
Re-Open and Amend Order 535-246 to specifically address the vertical and
directional wells.
12.
The
above-referenced testimony and exhibits show that the granting of the
Application will allow more efficient reservoir drainage, and will prevent
waste, will assure a greater ultimate recovery of hydrocarbons and will not
violate correlative rights.
13.
ConocoPhillips has agreed to be bound by the oral order of the Commission.
14.
Based on the facts stated in the Application, having received no protests, and
based on the Hearing Officer review under Rule 511, the Commission should enter
an order to establish four approximate 640-acre drilling and spacing units for
Sections 8 and 28, Township 4 South, Range 63 West, 6th P.M., Section 2, Township 4 South,
Range 64 West, 6th P.M., and Section 2, Township 5 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.
ORDER
NOW, THEREFORE, IT IS ORDERED, that four 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 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 63 West, 6th P.M.
Section 8:
All
(“DSU #1)
Township 4 South, Range 63 West, 6th P.M.
Section 28:
All
(“DSU #2)
Township 4 South, Range 64 West, 6th P.M.
Section 2:
All
(“DSU #3)
Township 5 South, Range 64 West, 6th P.M.
Section 2:
All
(“DSU #4)
IT IS FURTHER ORDERED, that the
spacing units and well location rules established above are applicable to the
drilling and production of horizontal wells only, with vertical and directional
wells drilled to the Niobrara Formation remaining subject to Commission Rule
318.a. or such other orders as may be entered by the Commission.
IT IS FURTHER ORDERED, 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 thirty (30) days after the date of 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 15th
day of January, 2013, as of January 7,
2013.
AMENDED THIS 5th
day of April 2013, as of January 7, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Robert J. Frick, Secretary