BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF
THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF EOG RESOURCES, INC., FOR AN ORDER TO
ESTABLISH AN APPROXIMATE 1,280-ACRE EXPLORATORY DRILLING AND SPACING UNIT FOR
SECTIONS 17 AND 20, TOWNSHIP 10 NORTH, RANGE 60 WEST, 6TH P.M., FOR
THE NIOBRARA FORMATION, UNNAMED FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 1211-SP-145
ORDER NO.
535-262 |
REPORT OF THE COMMISSION
The Commission heard this matter on February 11, 2013, at the offices of
the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver,
Colorado, upon application for an order to vacate two approximate 640-acre
drilling and spacing units established by Order No. 535-28 for Sections 17 and
20, Township 10 North, Range 60 West, 6th P.M., and to establish an
approximate 1280-acre stand-up exploratory drilling and spacing unit for
Sections 17 and 20, Township 10 North, Range 60 West, 6th P.M., and
approve up to ten wells within the unit, for the production of oil, gas and
associated hydrocarbons from the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1.
EOG Resources,
Inc. (“EOG” 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.
On June 27, 2011,
the Commission entered Order No. 535-28 which, among other things, established
52 approximate 640-acre drilling and spacing units, and approved one horizontal
well within each unit, for the production of oil, gas and associated
hydrocarbons from the Niobrara Formation.
Sections 17 and 20, Township 10 North, Range 60 West, 6th P.M.
are subject to this Order for the Niobrara Formation.
5.
On September 17,
2012 (amended January 25, 2013), EOG, by its attorneys, filed with the
Commission pursuant to §34-60-116 C.R.S., a verified Second Amended application
(“Second Amended Application”) for an order to vacate two approximate 640-acre
drilling and spacing units established by Order No. 535-28 for Sections 17 and
20, Township 10 North, Range 60 West, 6th P.M. and establish an
approximate 1,280-acre stand-up exploratory drilling and spacing unit for the
below-described lands (“Application Lands”), 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 10 North, Range 60
West, 6th P.M.
Section 17: |
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Section 20: |
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6.
On November 8,
2012, the Bureau of Land Management (“BLM” or “Protestant”) filed a protest to
the Second Amended Application due to an Application for Permit to Drill (‘APD”)
for the Sligo Ridge #18-20H Well (API No. 05-123-33758) (“Well”) on the
Application Lands. The parties agreed that upon the establishment of the
proposed approximate 1280-acre exploratory drilling and spacing unit for the
Application Lands, EOG will file a Sundry to abandon the APD approved for the
Well, and may file a subsequent APD for a planned horizontal well that transects
the section line between Sections 17 and 20, Township 10 North, Range 60 West, 6th
P.M. The parties further agreed that
all planned wells will be administered under the new approximate 1280-acre
exploratory drilling and spacing unit.
Such protest was subsequently withdrawn by the BLM on January 25, 2013.
7.
On November 9,
2012, EOG, by its attorneys, filed with the
Commission a written request to approve the Second Amended Application based on
its merits of the verified application and the supporting exhibits. Sworn written testimony and exhibits
were submitted in support of the Second Amended Application.
8.
Land testimony and
exhibits submitted in support of the Second Amended Application by Jason
McLaren, Landman for EOG, showed that EOG holds a leasehold interest in the
Application Lands.
9.
Geologic testimony
and exhibits submitted in support of the Second Amended Application by John H.
Melby, Petroleum Geologist for EOG, showed the regional dip for the Niobrara
Formation underlying the Application Lands is approximately 25-35 feet per mile
to the west across the proposed spaced area and 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 345 to 350 feet.
10.
Engineering
testimony and exhibits submitted in support of the Second Amended Application by
Osman G. Apaydin, Reservoir Engineer for EOG, showed analogous EOG horizontal
wells in 640-acre drilling and spacing units have a recovery factor of 5%. Additional testimony showed that the
average drainage area for a short lateral well is 99 acres; however, the average
drainage area for a long lateral well is 168 acres, resulting in an improvement
of 70%. The testimony concluded that
by maximizing horizontal well length, the longer lateral well will have the
increased possibility of crossing fault/fracture-like features which will lead
to substantially larger recovery of hydrocarbons.
11.
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.
12.
EOG has agreed to be bound by the oral order of the Commission.
13.
Based on the facts stated in the Second Amended Application, having resolved all
protests, and based on the Hearing Officer review under Rule 511, the Commission
should enter an order to vacate two approximate 640-acre drilling and spacing
units established by Order No. 535-28 for Sections 17 and 20, Township 10 North,
Range 60 West, 6th P.M., and to establish an approximate 1280-acre
stand-up exploratory drilling and spacing unit for Sections 17 and 20, Township
10 North, Range 60 West, 6th P.M., and approve up to ten wells within
the unit, 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 established by Order No. 535-28 for Sections 17 and 20, Township
10 North, Range 60 West, 6th P.M., are hereby vacated, and one
approximate 1280-acre stand-up exploratory drilling and spacing unit for the
below-described lands, is hereby established, and up to ten wells within the
unit, 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 10 North, Range 60 West, 6th
P.M.
Section 17: |
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Section 20: |
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IT IS FURTHER ORDERED, the provisions contained
in the above order, shall become effective forthwith.
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 __________ day of February, 2013, as of February 11, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By:__________________________________
Robert J. Frick, Secretary