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 FOR THE NIOBRARA  FORMATION, UNNAMED FIELD, WELD  COUNTY, COLORADO

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CAUSE NO. 535

 

DOCKET NO. 1406-AW-13

 

ORDER NO. 535-490

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on June 17, 2014, at the Rifle Branch Library, Garfield County Public Library District, 207 East Avenue, Rifle, Colorado, upon application for an order to approve an additional 15 wells, for a total of up to 16 horizontal wells, within an approximate 1,280-acre drilling and spacing unit established by Order No. 535-8 for Sections 26 and 35, Township 8 North, Range 62 West, 6th P.M. for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Red Hawk Petroleum, LLC (“Red Hawk” 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 4, 2011, the Commission entered Order No. 535-8 which established an approximate 1,280-acre drilling and spacing unit for Sections 26 and 35, Township 8 North, Range 62 West, 6th P.M., and approved one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

            5.         On January 23, 2012, the Commission entered Order No. 535-136 which pooled all interests within the approximate 1,280-acre unit. Sections 26 and 35, Township 8 North, Range 62 West, 6th P.M. are subject to this Order for the Niobrara Formation.

 

            6.         On April 17, 2014, Red Hawk, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S. for an order to approve an additional 15 horizontal wells, for a total of up to 16 horizontal wells within an approximate 1,280-acre drilling and spacing unit established by Order No. 535-8 for the below-described lands (“Application Lands”) for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:

 

 

                        Township 8 North, Range 62 West, 6th P.M.

                        Section 26:      All

                        Section 35:      All

 

7.         On June 3, 2014, Red Hawk, 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.

 

8.         Land testimony and exhibits submitted in support of the Application by Matt Skinner, Land Contractor for Red Hawk, showed that the surface interest in the Application Lands is owned in fee and the mineral interest is federally-owned and owned in fee. Testimony further showed that the Applicant is an owner with the right to drill wells in the Application Lands.

 

9.         Geologic testimony and exhibits submitted in support of the Application by Constance M. Walker, Senior Geologist with Petrotek Engineering Corporation for Red Hawk, showed the Niobrara Formation is present throughout the Application Lands, is approximately 225 to 250 feet thick, and is generally of uniform thickness throughout the Application Lands.

 

10.       Engineering testimony and exhibits submitted in support of the Application by Kenneth J. Cooper, Engineering Manager and founding Principal of Petrotek Engineering Corporation for Red Hawk, showed that limited microseismic data available in the region indicates that the drainage area for a 4000-foot lateral well will be no more than approximately 46 acres.  Testimony further showed decline curve data from multiple wells in the immediate vicinity of the Application Lands indicates that a one-section length horizontal well result in an average drainage area of 23 acres and a median drainage area of 16 acres. Testimony concluded the drilling, completion, and production of horizontal Niobrara wells requested in Red Hawk’s Application for the Application Lands, will increase recovery from the reservoir and thereby prevent waste, will protect correlative rights, and can be done economically and efficiently.

 

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 hydrocarbons, and will not violate correlative rights.

 

12.       Red Hawk 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 to approve an additional 15 wells, for a total of up to 16 horizontal wells, within an approximate 1,280-acre drilling and spacing unit established by Order No. 535-8 for Sections 26 and 35, Township 8 North, Range 62 West, 6th P.M. for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

            1.         An additional 15 horizontal wells, for a total of up to 16 horizontal wells within an approximate 1,280-acre drilling and spacing unit established by Order No. 535-8 for the below-described lands, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:

 

                        Township 8 North, Range 62 West, 6th P.M.

                        Section 26:      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 35 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 July, 2014, as of June 17, 2014.                     

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary