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 drilling and spacing unit for Section 16, Township 10 North, Range 57 West, 6^th P.M., and approve up to four horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.         Whiting Oil and Gas Corporation (“Whiting” 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 9 and 16, Township 10 North, Range 57 West, 6^th P.M. are subject to this Rule for the Niobrara Formation.

            5.         On January 24, 2013 (Amended March 22, 2013), Whiting, 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 960-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to four horizontal wells within the 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 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 10 North, Range 57 West, 6^th P.M.

Section 9:        S½

Section 16:      All

6.         On March 12, 2013, Carrizo Oil & Gas, Inc. (“Carrizo” or “Protestant”), by its attorneys, filed a protest to the Application alleging the request to establish an approximate 960-acre drilling and spacing unit would adversely affect Carrizo’s correlative rights by rendering the full development of Section 9 infeasible.  Carrizo requested the Commission deny Whiting’s request to establish an approximate 960-acre drilling and spacing unit and find that the appropriate spacing in the Application Lands is a 640-acre unit for Section 16 only.

7.         On March 19, 2013, a prehearing conference (“PHC”) was held in this matter.

8.         On March 20, 2013, Carrizo withdrew its Protest in the matter, contingent upon Whiting agreeing to withdraw the S½ of Section 9 from the Application Lands, and establish a 640-acre drilling and spacing unit for Section 16 only; and to drill any horizontal wells in Section 16, Township 10 North, Range 57 West, 6^th P.M. “in a North-South orientation and completed and stimulated within, but no closer than, 100 feet from Sections 9 and 21, Township 10 North, Range 57 West, 6^th P.M., so long as the Commission grants to Carrizo the reciprocal right with respect to future wells to be drilled in Sections 9 and 21; and Carrizo agrees not to oppose Whiting’s well density requests for up to 16 horizontal wellbores drilled in a North-South orientation in the Application Lands, contingent upon Whiting’s agreement not to oppose Carrizo should it seek comparable well density in Sections 9 and 21, Township 10 North, Range 57 West, 6^th P.M.”

9.         On March 22, 2013, Whiting filed an Amended Application withdrawing Section 9, Township 10 North, Range 57 West, 6^th P.M. from the Application Lands, and incorporating the terms of the conditional withdrawal of Carrizo’s Protest as stated in Paragraph 8, above.

10.       On March 22, 2013, Whiting, 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.

11.       Land testimony and exhibits submitted in support of the Application by Scott McDaniel, Regional Land Manager for Whiting, showed that Whiting owns a significant leasehold in the Application Lands.

12.       Geologic testimony and exhibits submitted in support of the Application by John R. Forster, Regional Geologic Manager for Whiting, showed the gross thickness of the Niobrara Formation under the Application Lands is approximately 325 feet with a regional dip to the west at approximately 40 – 60 feet per mile. Testimony further showed the Niobrara Formation is present and continuous throughout the Application Lands and shares a common source of supply.

13.       Engineering testimony and exhibits submitted in support of the Application by Ralph L. Nelms, Senior Reservoir Engineer for Whiting, showed estimated ultimate recovery (“EUR”) from the Niobrara Formation to be 252,135 stock tank barrels (“STB”) per horizontal well.  Additional testimony estimated a recovery factor of 5.0% from the Niobrara Formation.  The drainage area for each of the four horizontal wells is 160 acres per well.  Further testimony concluded the economics of the project were sound.

14.       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.

15.       Whiting agreed to be bound by oral order of the Commission. 

16.       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 establish an approximate 640-acre drilling and spacing unit for Section 16, Township 10 North, Range 57 West, 6^th P.M., and approve up to four horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

ORDER

            NOW, THEREFORE IT IS ORDERED, that an approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established, and up to four horizontal wells within the 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 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 10 North, Range 57 West, 6^th P.M.

Section 16:      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 Procedures 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