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

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: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-3 for Section 21, Township 9 North, Range 58 West, 6^th P.M.; and 2) establish an approximate 320-acre exploratory drilling and spacing unit for Section 21, Township 9 North, Range 58 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, Inc. (“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.         On February 22, 2011, the Commission entered Order No. 535-3 which, among other things, established 160 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.  Section 21, Township 9 North, Range 58 West, 6^th P.M. is subject to this Order for the Codell-Niobrara Formation.

            5.         On March 7, 2013, Noble, by its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-3 for Section 21, Township 9 North, Range 58 West, 6^th P.M.; and 2) establish an approximate 320-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 horizontal wellbore to be no closer than 600 feet from the unit boundaries, without exception being granted by the Director:

            Township 9 North, Range 58 West, 6^th P.M.

                        Section 21:      N½ 

6.         On April 23, 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.

7.         Land testimony and exhibits submitted in support of the Application by Joseph H. Lorenzo, Senior Land Manager for Noble, showed that the surface of the Application Lands is comprised of fee ownership, the mineral ownership of the Application Lands is comprised of fee, and that Noble owns a partial leasehold ownership interest in the Application Lands.

8.         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 and Niobrara Formation type wells, demonstrating the Codell-Niobrara Formation underlies, and is generally of uniform thickness throughout the Application Lands. 

            9.         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 .85%, 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.

10.       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.

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

12.       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: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-3 for Section 21, Township 9 North, Range 58 West, 6^th P.M.; and 2) establish an approximate 320-acre exploratory drilling and spacing unit for Section 21, Township 9 North, Range 58 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 drilling and spacing unit established by Order No. 535-3 for Section 21, Township 9 North, Range 58 West, 6^th P.M., is hereby vacated.

            IT IS FURTHER ORDERED, that an approximate 320-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 horizontal wellbore to be no closer than 600 feet from the unit boundaries, without exception being granted by the Director:

            Township 9 North, Range 58 West, 6^th P.M.

                        Section 21:      N½ 

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 _____ day of May, 2013, as of May 6, 2013.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary