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

 

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN AN UNNAMED FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 535

 

ORDER NO. 535-38

 

 

REPORT OF THE COMMISSION

 

                        This cause came on for hearing before the Commission on June 27, 2011, Elbert County Fairgrounds, Ag Building, 95 Ute Avenue, Kiowa, Colorado, for an order to establish an approximate 640-acre drilling and spacing unit for Section 34, Township 7 North, Range 62 West, 6th P.M., and approve one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.    Chesapeake Exploration, LLC (“Chesapeake” 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 April 27, 1998, the Commission adopted Rule 318A., which among other things, allowed certain drilling locations to be utilized to drill or twin a well, deepen a well or recomplete a well and to commingle any or all of the Cretaceous Age Formations from the base of the Dakota Formation to the surface.  On December 5, 2005, Rule 318A. was amended to, among other things, allow interior infill and boundary wells to be drilled and wellbore spacing units to be established.  Section 34, Township 7 North, Range 62 West, 6th P.M. is subject to this Rule.

 

5.    On April 28, 2011, Chesapeake, by its attorneys, filed with the Commission a verified application (the “Application”) for an order to establish an approximate 640-acre drilling and spacing unit for the below-listed lands, (the “Application Lands”) and approve one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore for the permitted well to be no closer than 600 feet from the unit boundaries without exception being granted by the Director:

 

Township 7 North, Range 62 West, 6th P.M. 

Section 34:  All

 

6.    On June 14, 2011, Chesapeake, 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 Nick Watkins, District Landman for Chesapeake, showed that Chesapeake is a leaseholder of the Application Lands.

 

8.    Geology testimony and exhibits submitted in support of the Application by Cameron Thompson, Geologist for Chesapeake, showed that the Niobrara Formation underlies the entirety of the Application Lands with a total thickness of approximately 275 to 310 feet.

 

9.    Engineering testimony and exhibits submitted in support of the Application by Matthew Nikkel, Reservoir Engineer for Chesapeake, showed anticipates an estimated ultimate recovery of 360,000 barrels of oil, 244,276 MCF gas, and a calculated oil drainage area for the Niobrara Formation within the Application Lands at 74 acres per horizontal well, and a calculated gas drainage area for the Niobrara Formation within the Application Lands at 64 acres per horizontal well.

 

10.  The Application was reviewed by the Colorado Department of Public Health and Environment (“CDPHE”) pursuant to consultation provisions of Rule 306.d.  In a letter dated June 10, 2011, the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any additional conditions of approval are necessary for approving the Application.

 

11.  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 gas, and will not violate correlative rights.

 

12.  Chesapeake agreed to be bound by oral order of the Commission. 

 

13.  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 establishing an approximate 640-acre drilling and spacing unit for Section 34, Township 7 North, Range 62 West, 6th P.M., and approve one horizontal well 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-listed lands is hereby established, and one horizontal well is approved within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

 

Township 7 North, Range 62 West, 6th P.M. 

Section 34:  All

 

                        IT IS FURTHER ORDERED, that the treated interval of the wellbore for the permitted well shall be no closer than 600 feet from the unit boundaries, without exception being granted by the Director.

 

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 ___30th__ day of June, 2011, as of June 27, 2011.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________         

                                                                                    Robert A. Willis, Acting Secretary

 

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

June 30, 2011