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

REPORT OF THE COMMISSION

The Commission heard this matter on March 25, 2013, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to establish an approximate 640-acre exploratory drilling and spacing unit for Section 22, Township 8 North, Range 60 West, 6^th P.M., and approve one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.         Noble Energy, LLC (“Noble” 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, unless authorized by order of the Commission upon hearing.  Section 22, Township 8 North, Range 60 West, 6^th P.M. is subject to this Rule for the Codell-Niobrara Formation.

5.         On November 2, 2012 (Amended January 18, 2013), Noble, by its attorneys, filed with the Commission pursuant to § 34-60-116 C.R.S., a verified amended application (“Amended Application”) for an order to establish an approximate 1280-acre exploratory drilling and spacing unit for the below-described lands (“Application Lands”), and approve one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

Township 8 North, Range 60 West, 6^th P.M.

Section 22:      All

Section 23:      All

6.         On December 26, 2012, the Bureau of Land Management (“BLM”) submitted a protest in the matter.

7.         On December 28, 2012, pursuant to Rule 506(c), the matter was continued by order of the Commission to the March 25, 2013 hearing.

8.         On January 18, 2013, after consultation with BLM, Noble submitted an Amended Application withdrawing Section 23, Township 8 North, Range 60 West, 6^th P.M. from the Application Lands and modifying the request to a 640-acre exploratory drilling and spacing unit.

9.         On January 23, 2013, BLM withdrew the protest.

10.       On January 25, 2013, the COGCC received a Rule 510 Statement from Don Stanley, a leased mineral owner.  Mr. Stanley stated his belief the requested spacing order violated the terms of his lease and requested the Commission consider alternative spacing proposals.

11.       On January 29, 2013, Noble, 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.

12.       On February 7, 2013, Noble, by its attorneys, requested and Commission staff granted, a continuance to the March 25, 2013 hearing.

13.       On March 12, 2013, Noble, by its attorneys, filed with the Commission a second 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.

14.       Land testimony and exhibits submitted in support of the Application by Julie T. Jenkins, Land Manager for Noble, showed the surface of the Application Lands is comprised of fee and federal ownership, the mineral ownership of the Application Lands is comprised of fee and federal ownership, and that Noble owns a partial leasehold ownership interest in the Application Lands.  

15.       Geologic testimony and exhibits submitted in support of the Application by Alicia Branch, Senior Geologist for Noble showed an analysis of cross-sections from nearby Codell-Niobrara Formation type wells, demonstrating the Codell-Niobrara Formation underlies, and is generally of uniform thickness (240 feet) throughout the Application Lands. 

16.       Engineering testimony and exhibits submitted in support of the Application by Chandler Newhall, Senior Production Engineer for Noble, showed a single horizontal well would have a recovery factor of .55%, with an estimated ultimate recovery (“EUR”) of 172,800 barrels of oil and 259,200 MCF of gas.  Testimony concluded the use of horizontal well technology would significantly increase recovery from the reservoir and thereby prevent waste, minimize surface disturbance, and protect correlative rights.

17.       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.

18.       Noble agreed to be bound by oral order of the Commission. 

19.       Based on the facts stated in the verified Application, having received no protests, and based on the Hearings Officer review of the Application under Rule 511., the Commission should enter an order to establish an approximate 640-acre exploratory drilling and spacing unit for Section 22, Township 8 North, Range 60 West, 6^th P.M., and approve one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation.

ORDER

NOW, THEREFORE IT IS ORDERED, that an approximate 640-acre exploratory drilling and spacing unit for the below-described lands, is hereby established, and one horizontal well within the unit, is hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

Township 8 North, Range 60 West, 6^th P.M.

Section 22:      All                                            (640-acre DSU)

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   5^th   day of April, 2013, as of March 25, 2013.      

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary