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 NIOBRARA FORMATION, UNNAMED FIELD, ARAPAHOE COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 1407-SP-2089
ORDER NO. 535-516 |
REPORT OF THE COMMISSION
The Commission heard this matter on July 28, 2014, at the Weld County Administration Building - Events Center, 1150 “O” Street, Greeley, CO upon application for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-246 for Section 8, Township 4 South, Range 63 West, 6th P.M.; and 2) establish an approximate 1280-acre drilling and spacing unit for Sections 7 and 8, Township 4 South, Range 63 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. Sections 7 and 8, Township 4 South, Range 63 West, 6th P.M. are subject to Rule 318.a. for the Niobrara Formation.
5. On January 7, 2013 (Amended April 5, 2013), the Commission entered Order No. 535-246 which established four approximate 640-acre drilling and spacing units and approved up to two horizontal wells for 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 920 feet from the treated interval of any other wellbore located in the unit. Section 8, Township 4 South, Range 63 West, 6th P.M. is subject to this Order for the Niobrara Formation.
6. On May 29, 2014, ConocoPhillips, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-246 for Section 8, Township 4 South, Range 63 West, 6th P.M., and 2) establish an approximate 1280-acre 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 productive interval of the wellbore to be located no closer than 460 feet from the unit boundaries, and no closer than 960 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:
Township 4 South, Range 63 West, 6th P.M.
Section 7: All
Section 8: All
Applicant stated that all proposed wells will be located on no more than two well pads within the drilling and spacing unit.
7. On July 15, 2014, 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.
8. Land Testimony and exhibits submitted in support of the Application by Diane Schaenen, Staff Landman, Rockies Business Unit, Niobrara Land, for ConocoPhillip, showed that ConocoPhillips owns 1005 of the leasehold interest in the Application Lands.
9. Geologic Testimony and exhibits submitted in support of the Application by Zachary S. Mester, Senior Geologist for ConocoPhillips, showed that the Niobrara Formation is a Cretaceous sequence of chalks, marls, limestones, and shales that were deposited in the Western Interior Seaway. Further testimony showed that the Niobrara Formation underlies the Application Lands, is fairly uniform in thickness and continuous throughout the aream and averages around 320 feet under the Application Lands
10. Engineering Testimony and exhibits submitted in support of the Application by Clint Hutchinson, Lead Reservoir Engineer, showed that the long lateral of 9,640 feet exposes an additional 920 feet of reservoir. The drilling of a long lateral would permit the recovery with horizontal wells of the resource within the 920-foot area between the two sections which would otherwise not be recovered with 640-acre spacing and 460-foot setbacks on each side of the section line. The estimated drainage area is not greater than 407.3 acres per individual well. If a second optional well is drilled, total drainage area from both wells is estimated to be not greater than 814.5 acres.
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. ConocoPhillips 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: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-246 for Section 8, Township 4 South, Range 63 West, 6th P.M.; and 2) establish an approximate 1280-acre drilling and spacing unit for the 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.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 640-acre drilling and spacing unit established by Order No. 535-246 for Section 8, Township 4 South, Range 63 West, 6th P.M., is hereby vacated.
2. An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of 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 productive interval of the wellbore will be located no closer than 460 feet from the unit boundaries, and no closer than 960 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:
Township 4 South, Range 63 West, 6th P.M.
Section 7: All
Section 8: All
3. All proposed wells shall be located on no more than two well pads within the drilling and spacing unit.
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 13th day of August, 2014, as of July 28, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary