BEFORE THE OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE CODELL AND NIOBRARA FORMATIONS, UNNAMED FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 1406-SP-2076
ORDER NO. 535-496 |
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 modify Order Nos. 535-3, 535-102, and 535-436, allowing 300 foot boundary sections by the Commission for the southern section lines of Sections 22, 23, and 24, Township 9 North, Range 59 West, 6th P.M. the eastern section lines of Section 28 and 33, Township 9 North, Range 59 West, 6th P.M. and the northern section lines of Sections 3 and 4, Township 8 North, Range 59 West, 6th P.M.
FINDINGS
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. Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that wells drilled, on unspaced lands, 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. Sections 3 and 4, Township 8 North, Range 59 West, 6th P.M. and Sections 22, 23, 24, 28, and 33, Township 9 North, Range 59 West, 6th P.M. are subject to Rule 318.a. for the Codell and Niobrara Formations.
5. 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, with the surface location for any permitted horizontal well to be located anywhere in the drilling and spacing unit with the initial perforation and the ultimate bottomhole location being no closer than 600 feet from the boundaries of the drilling and spacing unit, without exception being granted by the Director of the Commission. Sections 22, 23, 24 and 33, Township 9 North, Range 59 West, 6th P.M. are subject to this Order for the Niobrara Formation.
6. On December 16, 2013, the Commission entered Order No. 535-436 which established an approximate 640-acre drilling and spacing unit for Section 4, Township 8 North, Range 59 West, 6th P.M. and approved one horizontal well within the unit for the production of oil, gas and associated hydrocarbons from the Codell-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.
7. On April 29, 2014, Noble, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to modify Order Nos. 535-3, 535-102, and 535-436, allowing 300 foot boundaries for the southern section lines of Sections 22, 23, and 24, Township 9 North, Range 59 West, 6th P.M.the eastern section lines of Section 28, and 33, Township 9 North, Range 59 West, 6th P.M. and the northern section lines of Sections 3 and 4, Township 8 North, Range 59 West, all for the Codell and Niobrara Formations, but only as to the Application Lands described below, effective as of the date of the Application:
Township 8 North, Range 59 West, 6th P.M.
Section 3: All (specific to the northern unit boundary line only)
Section 4: All (specific to the northern unit boundary line only)
Township 9 North, Range 59 West, 6th P.M.
Section 22: All (specific to the southern unit boundary line only)
Section 23: All (specific to the southern unit boundary line only)
Section 24: All (specific to the southern unit boundary line only)
Section 28: All (specific to the eastern unit boundary line only)
Section 33: All (specific to the eastern unit boundary line only)
8. On April 29, 2014, 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. On June 13, 2014, the Bureau of Land Management (“BLM”) and Noble reached an agreement wherein for purposes of Section 4, Township 8 North, Range 59 West, 6th P.M. of the Application Lands, approximately 475 feet of the northern boundary line of Section 4, Township 8 North, Range 59 West, 6th P.M. extending from the east boundary line of Section 4 to where it abuts the western boundary line of Section 34, Township 9 North, Range 59 West, 6th P.M. will have a setback of 300 feet. The remainder of northern boundary line of Section 4 will remain at a setback of 600 feet. Noble shall be allowed to permit, drill and complete any approved horizontal well in Section 34, Township 9 North, Range 59 West, 6th P.M. with the 300 foot setbacks from approximately 475 feet of the northern boundary line as noted above in Section 4, Township 8 North, Range 59 West, 6th P.M.
10. Land testimony and exhibits submitted in support of the Application by Julie Jenkins, Land Manager, for Noble, showed that Noble has a majority leasehold interest in the Application Lands. Testimony further showed that This language of Commission Order No. 535-3 necessitated the filing of the Application and the request for the 300' setbacks for the southern section lines of Sections 22, 23, and 24 of the Application Lands, the eastern section lines of Sections 28 and 33 of the Application Lands, and the northern section lines of Sections 3 and 4 of the Application Lands, and by modifying the formation referenced as to the Niobrara and Codell Formations. :
11. Geologic testimony and exhibits submitted in support of the Application by Mark Nicholson, Geologist, for Noble stated that the Codell and Niobrara Formations exist under the Application Lands, that the average thickness of the Codell formation within the Application Lands is 9 feet, that the average thickness of the Niobrara formation within the Application Lands is 245 feet, and that the Codell Formation immediately underlies the Niobrara Formation.
12. Engineering testimony and exhibits submitted in support of the Application by Jenette Hilton, Senior Production Engineer for Noble, indicated that volumetric calculations of the Codell-Niobrara formation indicate that the estimated recovery factor of hydrocarbons under the Application Lands using a horizontal lateral would be approximately 0.075% per well. Such testimony also illustrated that the economic calculations indicate that the NPV10 and rate of return values for vertical well development would be negative while and the horizontal lateral development is economic.
13. 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.
14. Noble agreed to be bound by oral order of the Commission.
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 modify Order Nos. 535-3, 535-102, and 535-436, allowing 300 foot boundary sections by the Commission for the southern section lines of Sections 22, 23, and 24, Township 9 North, Range 59 West, 6th P.M. the eastern section lines of Section 28 and 33, Township 9 North, Range 59 West, 6th P.M. and the northern section lines of Sections 3 and 4, Township 8 North, Range 59 West, 6th P.M.
ORDER
NOW, THEREFORE IT IS ORDERED, that:
1. Order Nos. 535-3, 535-102, and 535-436, allowing 300 foot setbacks from the boundaries for the southern section lines of Sections 22, 23, and 24, Township 9 North, Range 59 West, 6th P.M. the eastern section lines of Section 28, and 33, Township 9 North, Range 59 West, 6th P.M. and the northern section lines of Sections 3 and 4, Township 8 North, Range 59 West, 6th P.M. all for the Codell and Niobrara Formations, but only as to the Application Lands described below, effective as of the date of the Application:
Township 8 North, Range 59 West, 6th P.M.
Section 3: All (specific to the northern unit boundary line only)
Section 4: All (specific to the northern unit boundary line only)
Township 9 North, Range 59 West, 6th P.M.
Section 22: All (specific to the southern unit boundary line only)
Section 23: All (specific to the southern unit boundary line only)
Section 24: All (specific to the southern unit boundary line only)
Section 28: All (specific to the eastern unit boundary line only)
Section 33: All (specific to the eastern unit boundary line only)
2. For purposes of Section 4, Township 8 North, Range 59 West, 6th P.M. of the Application Lands, approximately 475 feet of the northern unit boundary line of Section 4, Township 8 North, Range 59 West, 6th P.M. extending from the eastern unit boundary line of Section 4 to where it abuts the western unit boundary line of Section 34, Township 9 North, Range 59 West, 6th P.M. will have a setback of 300 feet from the unit boundary line. The remainder of northern boundary line of Section 4 will remain at a setback of 600 feet. Noble shall be allowed to permit, drill and complete any approved horizontal well in Section 34, Township 9 North, Range 59 West, 6th P.M. with the 300 foot setbacks from approximately 475 feet of the northern boundary line as noted above in Section 4, Township 8 North, Range 59 West, 6th P.M.
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