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

REPORT OF THE COMMISSION

            The Commission heard this matter on July 29, 2013, at offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to: 1) vacate three approximate 640-acre drilling and spacing units established by Order No. 535-3 for Sections 20, 28 and 29, Township 9 North, Range 59 West, 6^th P.M.; 2) vacate pooling Order Nos. 535-223 and 535-224 for Sections 28 and 29, Township 9 North, Range 59 West, 6^th P.M.; and 3) establish an approximate 1920-acre Unconventional Resource Unit (“URU”) for Sections 20, 28 and 29, Township 9 North, Range 59 West, 6^th P.M., and authorize an appropriate number of wells in order to effectively and efficiently recover the 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.  Sections 20, 28 and 29, Township 9 North, Range 59 West, 6^th P.M. are subject to this Order for the Niobrara Formation.

5.         On November 15, 2012, the Commission entered Order No. 535-223 which, among other things, pooled all interests in an approximate 640-acre drilling and spacing unit established for Section 28, Township 9 North, Range 59 West, 6^th P.M., to accommodate the Ptasnik LC 28-76HN Well, for the development and operation of the Niobrara Formation.

6.         On November 15, 2012, the Commission entered Order No. 535-224 which, among other things, pooled all interests in an approximate 640-acre drilling and spacing unit established for Section 29, Township 9 North, Range 59 West, 6^th P.M., to accommodate the Ptasnik LC 29-72HN Well, for the development and operation of the Niobrara Formation.

7.         On May 30, 2013, Noble, by its attorneys, filed with the Commission, a verified application (“Application”) for an order to: 1) vacate three approximate 640-acre drilling and spacing units established by Order No. 535-3 for Sections 20, 28 and 29, Township 9 North, Range 59 West, 6^th P.M.; 2) vacate pooling Order Nos. 535-223 and 535-224 for Sections 28 and 29, Township 9 North, Range 59 West, 6^th P.M.; and 3) establish an approximate 1920-acre Unconventional Resource Unit (“URU”) for the below-described lands (“Application Lands”), and authorize the appropriate number of wells in order to effectively and efficiently recover the oil, gas and associated hydrocarbons from the Codell-Niobrara Formation within the proposed unit, 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 9 North, Range 59 West, 6^th P.M.

                        Section 20:      All

                        Section 28:      All

                        Section 29:      All

Applicant requested the permitted wells be located anywhere on the surface within the proposed unit, or on adjacent lands, with no more than one wellpad per quarter quarter section.

Applicant stated that existing vertical/directional wells within the unit shall be excluded from the proposed horizontal drilling and spacing unit, and that the allocation of proceeds from existing vertical/directional wells shall continue to pay on their current spacing or leasehold status.

8.         On July 16, 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.

9.         Land Testimony and exhibits submitted in support of the Application by Casey M. Kimble, Land Negotiator Advisor for Noble, showed Noble owns a leasehold interest in the Application Lands and that the surface and mineral ownership is held in fee.

10.       Geologic Testimony and exhibits submitted in support of the Application by Sara Martin, Geologist for Noble, included an isopach map showing the thickness of the Codell Formation averages 10 feet in thickness, and the Niobrara Formation averages 248 feet under the Application Lands.  Testimony concluded the Codell and Niobrara Formations exist throughout the Application Lands.

11.       Engineering testimony and exhibits submitted in support of the Application by Chandler Newhall, Senior Production Engineer for Noble, showed an estimated ultimate recovery (“EUR”) of 172,800 BOE and 259,200 MMCF of gas, a recovery factor of .125% per horizontal well. 

12.       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.

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

14.       The Commission finds that the unconventional resource unit shall be considered a drilling and spacing unit established by the Commission for purposes of Rule 530.a.

15.       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 three approximate 640-acre drilling and spacing units established by Order No. 535-3 for Sections 20, 28 and 29, Township 9 North, Range 59 West, 6^th P.M.; 2) vacate pooling Order Nos. 535-223 and 535-224 for Sections 28 and 29, Township 9 North, Range 59 West, 6^th P.M.; and 3) establish an approximate 1920-acre Unconventional Resource Unit (“URU”) for Sections 20, 28 and 29, Township 9 North, Range 59 West, 6^th P.M., and authorize an appropriate number of wells in order to effectively and efficiently recover the oil, gas and associated hydrocarbons from the Codell-Niobrara Formation.

ORDER

IT IS HEREBY ORDERED:

1.         Three approximate 640-acre drilling and spacing units established by Order No. 535-3 for Sections 20, 28 and 29, Township 9 North, Range 59 West, 6^th P.M., are hereby vacated.

2.         Order Nos. 535-223 and 535-224, which pooled all interests in Sections 28 and 29, Township 9 North, Range 59 West, 6^th P.M., are hereby vacated.

3.         An approximate 1920-acre Unconventional Resource Unit (“URU”) for the below-described lands (“Application Lands”), is hereby established, and an appropriate number of wells in order to effectively and efficiently recover the oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, 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 9 North, Range 59 West, 6^th P.M.

                        Section 20:      All

                        Section 28:      All

                        Section 29:      All

            4.         The permitted wells may located anywhere on the surface within the proposed unit, or on adjacent lands, with no more than one wellpad per quarter quarter section, from a maximum of nine multi-well pads.

            5.         Existing vertical/directional wells within the unit shall be excluded from the proposed horizontal drilling and spacing unit, and that the allocation of proceeds from existing vertical/directional wells shall continue to pay on their current spacing or leasehold status.  Existing horizontal wells will be included in the new 1920-acre URU, with production and costs being re-allocated from the first day of the month following approval of the URU by the Commission.

            6.         The Applicant shall brief the Commission on unit operations in one year.

IT IS FURTHER ORDERED:

1.         The provisions contained in the above order shall become effective immediately.

2.         The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

3.         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.

4.         An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.

ENTERED this   27   day of August, 2013, as of July 29, 2013.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary