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-2090
ORDER NO. 535-517 |
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. 535-244 for Section 24, Township 4 South, Range 64 West, 6th P.M.; and 2) establish an approximate 1280-acre drilling and spacing unit for Section 19, Township 4 South, Range 63 West, 6th P.M., and Section 24, Township 4 South, Range 64 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 19, Township 4 South, Range 63 West, 6th P.M. is subject to Rule 318.a. for the Niobrara Formation.
5. On January 7, 2013, Order No. 535-244 established an approximate 640-acre drilling and spacing unit and approved up to two horizontal wells for the Niobrara Formation, with the bottomhole locations not less than 600 feet from the boundary of the proposed drilling unit and not less than 460 feet from any other well or treated interval of a well producing from the Niobrara Formation. Section 24, Township 4 South, Range 64 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. 535-244 for Section 24, Township 4 South, Range 64 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 related 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 19: All
Township 4 South, Range 64 West, 6th P.M.
Section 24: 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 for ConocoPhillips, showed that both the surface and the mineral interest in the Application Lands is owned in fee, and that ConocoPhillips owns a partial undivided leasehold ownership 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 series of chalks, marls, limestones, and shales that were deposited in the Western Interior Seaway. Testimony further showed that the average thickness of the Niobrara Formation is approximately 330 feet throughout the Application Lands. Local depositional variations in thickness are minimal and the Formation gradually thickens in the north of the Application Lands.
10. Engineering Testimony and exhibits submitted in support of the Application by Clint Hutchinson, Lead Reservoir Engineer for ConocoPhillips, showed that the drainage area for analog horizontal Niobrara wells with a wellbore lateral of greater than 6,000 feet drilled in the Application Lands is estimated to be 407.2 acres. Therefore, a 1280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Niobrara Formation. Such testimony also indicated the proposed drilling and spacing unit will prevent or assist in preventing waste by ensuring that the pool as a whole may be efficiently and economically developed, without prejudice to the rights of other leasehold or mineral owners.
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 to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-244 for Section 24, Township 4 South, Range 64 West, 6th P.M.; and 2) establish an approximate 1280-acre drilling and spacing unit for Section 19, Township 4 South, Range 63 West, 6th P.M. and Section 24, Township 4 South, Range 64 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.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 640-acre drilling and spacing unit established by Order No. 535-244 for Section 24, Township 4 South, Range 64 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 19: All
Township 4 South, Range 64 West, 6th P.M.
Section 24: All
3. All proposed wells shall be located on no more than two well pads within the drilling and spacing unit.
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 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