BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF CONDOR ENERGY TECHNOLOGY LLC FOR AN ORDER TO
ESTABLISH AN APPROXIMATE 1280-ACRE EXPLORATORY DRILLING AND SPACING UNIT AND
APPROVE UP TO EIGHT HORIZONTAL WELLS WITHIN THE UNIT, FOR SECTIONS 18 AND 19,
TOWNSHIP 6 NORTH, RANGE 60 WEST, 6TH P.M., FOR THE NIOBRARA
FORMATION, UNNAMED FIELD, MORGAN COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 1305-SP-62
ORDER NO. 535-322 |
REPORT OF THE COMMISSION
The Commission heard this matter on May 6, 2013, at the Weld County Southwest
Services Complex, 4209 Weld County Road 24 ½, Longmont, Colorado, upon
application for an order to establish an approximate 1280-acre exploratory
drilling and spacing unit for Sections 18 and 19, Township 6 North, Range 60
West, 6th P.M., and approve up to eight horizontal wells within the
unit, for the production of oil, gas, and related hydrocarbons of the Niobrara
Formation.
FINDINGS
The Commission finds as follows:
1.
Condor Energy Technology, LLC
(“Condor” 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 18 and 19, Township 6 North, Range 60 West, 6th P.M. are
subject to Rule 318.a. for the Niobrara Formation.
5.
On March 7, 2013, Condor, by its attorneys, filed with the Commission
pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an
order to establish an approximate 1280-acre exploratory drilling and spacing
unit for the below-described lands (“Application Lands”), and approve up to
eight 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 6 North, Range 60 West, 6th P.M.
Section 18: All
Section 19: All
6.
On April 16, 2013, Prima Exploration, Inc (“Prima” or ‘Protestant”) filed
a protest to the Application.
7.
On May 6, 2013, the Commission convened an adjudicatory hearing wherein
Condor presented evidence in support of its Application and Prima presented
evidence in support of its Protest. The Commission deliberated and made the
following findings and entered the following orders.
8.
Land testimony and exhibits submitted in support of the Application by
Sean Fitzgerald, President of Business Development for South Texas Reservoir
Alliance LLC as contract operator for Condor, showed that the surface of the
Application Lands is owned in fee, the mineral ownership of the Application
Lands is held in fee, and that Condor owns a partial leasehold ownership
interest in the Application Lands.
9.
Geologic testimony and exhibits submitted in support of the Application
by Amy Noack, Senior Geologist for South Texas Reservoir Alliance LLC, as
contract operator for Condor stated an analysis of cross-sections from nearby
Niobrara Formation type wells, demonstrating the Niobrara Formation underlies,
and is generally of uniform thickness throughout the Application Lands.
10.
Engineering testimony and exhibits submitted in
support of the Application by Sean Fitzgerald, of South Texas Reservoir Alliance
LLC, as contract operator for Condor, indicated that the use of longer lateral
horizontal wells in the Application Lands are necessary to increase the recovery
of hydrocarbons from the reservoir and the economics utilized for the project
are economic and efficient.
11.
Land testimony and exhibits submitted in
support of the Protest by M. Scott Homsher, Land Manager for Prima, showed that
the combined leasehold interests of Prima and its partners is greater than 60%
in Sections 18 and 19, Township 6 North, Range 60 West, 6th P.M.,
(approximately 74% and 45% of the total acreage found in the respective
sections). Additional testimony showed that spacing the Application Lands for
1,280-acre development of the Niobrara Formation may result in the dilution of
interests in the respective sections, thereby adversely affecting Prima’s
correlative rights.
12. Geologic
testimony and exhibits submitted in support of the Protest by Jay T. Speer,
Geologist for Prima, showed that the Niobrara Formation underlies the
Application Lands and is a common source of supply.
13.
Engineering testimony and exhibits submitted in
support of the Application by David G. Rhodes, Petroleum Engineer for Prima,
indicated analogous horizontal wells recently drilled in the general vicinity of
the Application Lands showed that a longer lateral (drilled within a 1,280-acre
unit) may recover approximately 58% more in oil reserves than the reserves
drained from a shorter lateral (drilled within a 640-acre unit), while the
drilling and completion costs of the longer lateral are approximately 61% higher
than the shorter lateral. Additional testimony indicated that drilling longer
laterals in the Niobrara Formation underlying the Application Lands will not
promote the efficient and economic drainage of the reservoir.
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.
Condor agreed to be bound by oral order of the Commission.
16.
Based on the facts stated in the verified Application, having received one
protest, and based on the evidence presented to the Commission at an
adjudicatory hearing, the Commission should enter an order to establish an
approximate 1280-acre exploratory drilling and spacing unit for Sections 18 and
19, Township 6 North, Range 60 West, 6th P.M., and approve up to
eight horizontal wells within the unit, for the production of oil, gas, and
related hydrocarbons of the Niobrara Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that an approximate 1280-acre exploratory drilling
and spacing unit for the below-described lands, is hereby established, and up to
eight horizontal wells, are hereby approved, 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 6 North, Range 60 West, 6th P.M.
Section 18: All
Section 19: 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 _____ day of May, 2013, as of May 6, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary