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. 535-42

 

 

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 eight (8) approximate 640-acre drilling and spacing units for certain lands located in Township 9 North, Range 57 West, 6th P.M., and approve one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.     Marathon Oil Company (“Marathon” 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.  Certain lands located in Township 9 North, Range 57 West, 6th P.M. are subject to this Rule for the Niobrara Formation.

 

5.     On April 28, 2011, Marathon, by its attorneys, filed with the Commission a verified application (the “Application”) for an order to establish nine (9) approximate 640-acre drilling and spacing units for the below-listed lands, (the “Application Lands”), and approve one horizontal well within each 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 9 North, Range 57 West, 6th P.M. 

Sections 7, 8, 17 through 20, 29, 30, and 32

 

6.     On June 14, 2011, Marathon, 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 Tricia Clarke, Land Professional for Marathon, showed that the Applicant has either fully or partially leased the mineral interests in each section of the Application Lands, except Section 30, Township 9 North, Range 57 West, 6th P.M. in which Marathon holds no mineral ownership interest.  The testimony further showed that the Application Lands are primarily private fee leases with federal leases covering all or a part of three sections. 

8.     Geologic testimony and exhibits submitted in support of the Application by Matthew Humphreys, Petroleum Geologist for Marathon, showed that the Niobrara Formation is consistent, continuous, and underlies the Application Lands as a common source of supply with a regional dip of approximately 40 feet per mile to the west.  Total thickness of the Niobrara Formation under the Application Lands ranges from 286 to 316 feet.  

9.     Engineering testimony and exhibits submitted in support of the Application by Tara Salinas, Reservoir Engineer for Marathon, showed that analysis of non-Marathon wells in the Niobrara Formation in analogous areas reveals attractive estimates of estimated ultimate recovery and original oil-in-place with drainage areas for horizontal wells ranging from 197 to 362 acres. Horizontal wells are far more productive than vertical wells.  Additional testimony indicated granting the Application will result in efficient and economic development of Application Lands.   

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.   On June 17, 2011, Marathon submitted a letter, by its attorneys, requesting that Section 30, Township 9 North, Range 57 West, 6th P.M., be withdrawn from its Application. Consequently, the remaining lands considered for spacing under this Application are listed below:

 

Township 9 North, Range 57 West, 6th P.M. 

Sections 7, 8, 17 through 20, 29, and 32

 

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 gas, and will not violate correlative rights.

 

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

 

14.   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 eight (8) approximate 640-acre drilling and spacing units for certain lands located in Township 9 North, Range 57 West, 6th P.M., and approve one horizontal well within each unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

                        NOW, THEREFORE IT IS ORDERED, that eight (8) approximate 640-acre drilling and spacing units are hereby established, and one horizontal well is approved within each unit for the below-described lands, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

 

Township 9 North, Range 57 West, 6th P.M. 

Sections 7, 8, 17 through 20, 29, and 32

 

                        IT IS FURTHER ORDERED, that the treated interval of the wellbore for each 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