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

 

IN THE MATTER OF THE APPLICATION OF CONOCOPHILLIPS COMPANY, FOR AN ORDER TO ESTABLISH AN APPROXIMATE 1280-ACRE EXPLORATORY DRILLING AND SPACING UNIT AND APPROVE UP TO TWO HORIZONTAL WELLS WITHIN THE UNIT FOR SECTIONS 34 AND 35, TOWNSHIP 3 SOUTH, RANGE 65 WEST, 6TH P.M., FOR THE NIOBRARA FORMATION, UNNAMED FIELD, ADAMS COUNTY, COLORADO

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CAUSE NO. 535

 

DOCKET NO. 1310-SP-1204

 

ORDER NO. 535-430

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on October 28, 2013, at the Limon Community Center, 477 D Avenue, Limon, Colorado, upon application for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-89 for Section 34, Township 3 South, Range 65 West, 6th P.M.; and 2) establish an approximate 1280-acre exploratory drilling and spacing unit for Sections 34 and 35, Township 3 South, Range 65 West, 6th P.M., and approve up to two horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         ConocoPhillips Company (“ConocoPhillips” 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, on unspaced lands, 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.  Section 35, Township 3 South, Range 65 West, 6th P.M. is subject to Rule 318.a. for the Niobrara Formation.

 

5.         On October 31, 2011, the Commission entered Order No. 535-89 which, among other things, established 18 approximate 640-acre drilling and spacing units and approved up to two horizontal wells within each unit, for the production of oil, gas and related hydrocarbons from the Niobrara Formation, with surface locations being located anywhere within the unit or surrounding lands, but the lateral of such well may not enter the Niobrara Formation any closer than 300 feet from the section line, with the treated interval of the permitted wellbore to be located no closer than 460 feet from the boundary of the unit and no closer than 920 feet from the treated interval of any other well in the unit producing from the Niobrara Formation. Section 34, Township 3 South, Range 65 West, 6th P.M. is subject to this Order for the Niobrara Formation.

 

6.         On August 29, 2013, ConocoPhillips, by its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a verified concurrent application (“Concurrent Application”), Docket No. 1310-UP-227 for an order to pool all interests within an approximate 1280-acre exploratory drilling and spacing unit established for Sections 34 and 35, Township 3 South, Range 65 West, 6th P.M.  The Concurrent Application is scheduled for hearing on December 16, 2013.

 

7.         On August 29, 2013, ConocoPhillips, by its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an order to vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-89 for Section 34, Township 3 South, Range 65 West, 6th P.M., and establish an approximate 1280-acre exploratory drilling and spacing unit for the below-described lands (“Application Lands”)and approve up to two 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 460 feet from the unit boundaries, and no closer than 960 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:      .

 

Township 3 South, Range 65 West, 6th P.M.

Section 34:      All

Section 35:      All

 

The proposed wells shall be located on no more than two wellpads within the drilling and spacing unit.

 

8.         On October 15, 2013, ConocoPhillips, 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 Gary D. Williamson, Staff Landman for ConocoPhillips, showed that ConocoPhillips owns a partial undivided leasehold ownership interest in the Application Lands.

 

10.       Geologic testimony and exhibits submitted in support of the Application by Nathan Rogers, Geologist for ConocoPhillips, showed the Niobrara Formation is present throughout the Application Lands, is approximately 310 feet thick, and is generally of uniform thickness throughout the Application Lands.

 

11.       Engineering testimony and exhibits submitted in support of the Application by Clint Hutchinson, Lead Reservoir Engineer for ConocoPhillips, showed the drainage area of a horizontal well in the Niobrara formation within the Application Lands having a wellbore lateral of greater than 6,000 feet in length is estimated to be no greater than 407.3-acres. Testimony stated a horizontal well with a greater than 6,000 foot lateral producing from the Niobrara formation meets ConocoPhillips' economic requirements for exploratory wells.  Testimony showed that the drilling of a long lateral will recover resource within the 920-foot area between the two sections which would otherwise not be recovered with 640-acre spacing and 460-foot setbacks.

 

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.       ConocoPhillips 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 to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-89 for Section 34, Township 4 South, Range 65 West, 6th P.M.; and 2) establish an approximate 1280-acre exploratory drilling and spacing unit and approve up to two horizontal wells within the unit for the Sections 34 and 35, Township 3 South, Range 65 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 640-acre drilling and spacing units established by Order No. 535-89 for Section 34, Township 3 South, Range 65 West, 6th P.M., is hereby vacated.

 

 2.        An approximate 1280-acre exploratory drilling and spacing unit for the below-described lands, is hereby established, and up to two horizontal wells within the unit, are hereby approved, 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 460 feet from the unit boundaries, and no closer than 960 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

 

Township 3 South, Range 65 West, 6th P.M.

Section 34:  All

Section 35:  All

 

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   8th   day of November, 2013, as of October 28, 2013.

           

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary