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, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 1407-SP-2099
ORDER NO. 535-526 |
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 modify Order Nos. 407-514 and 535-104 to allow 300 foot setbacks to the unit boundaries of an approximate 640-acre drilling and spacing unit established for Section 1, Township 7 North, Range 60 West, 6th P.M. and an approximate 1280-acre drilling and spacing unit established for Sections 2 and 11, Township 7 North, Range 60 West, 6th P.M.
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 December 12, 2011, the Commission entered Order Nos. 407-514 and 535-104 which, among other things, established 1) an approximate 1,280-acre drilling and spacing unit for certain lands in Sections 2 and 11, Township 7 North, Range 60 West, 6th P.M.; 2) an approximate 640-acre drilling unit for Section 1, Township 7 North, Range 60 West, 6th P.M.; and 3) approved one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the surface location of the permitted well to be located on the surface anywhere within the proposed unit and the treated interval of the wellbore for the permitted well to be no closer than 600 feet from the unit boundaries, for lands subject to Rule 318.a. Sections 1, 2 and 11, Township 7 North, Range 60 West, 6th P.M. are subject to this Order for the Niobrara Formation.
5. On January 23, 2012, the Commission entered Order No. 535-140 which pooled all interests in an approximate 640-acre drilling and spacing unit established for Section 1, Township 7 North, Range 60 West, 6th P.M., for the development and operation of the Niobrara Formation.
6. On January 23, 2012, the Commission entered Order No. 535-137 which pooled all interests in an approximate 1280-acre drilling and spacing unit in Sections 2 and 11, Township 7 North, Range 60 West, 6th P.M., for the development and operation of the Niobrara Formation.
7. On November 15, 2012, the Commission entered Order Nos. 407-725 and 535-214 which approved up to two horizontal wells within an approximate 1,280-acre drilling and spacing unit established for Sections 2 and 11, Township 7 North, Range 60 West, 6th P.M. for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
8. On June 17, 2014, the Commission entered Order No. 535-487 which approved an additional seven wells, for a total of up to eight horizontal wells, within an approximate 640-acre drilling and spacing unit established for Section 1, Township 7 North, Range 60 West, 6th P.M. for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
9. On June 17, 2014, the Commission entered Order No. 535-488 which approved an additional 12 horizontal wells, for a total of up to 14 horizontal wells, within an approximate 1,280-acre drilling and spacing unit established for Sections 2 and 11, Township 7 North, Range 60 West, 6th P.M. for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
10. On May 29, 2014, Red Hawk, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to modify Order Nos. 407-514 and 535-104 to allow 300 foot setbacks to the unit boundaries for the drilling and spacing units established on the below-described lands (“Application Lands”):
Township 7 North, Range 60 West, 6th P.M.
Section 1: All
Section 2: All
Section 11: All
11. On July 15, 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.
12. On July 23, 2014, the Bureau of Land Management (“BLM”) filed a Protest to this Application.
13. On July 24, 2014, the BLM and Red Hawk reached an agreement where the BLM agrees to withdraw its Protest on the following basis:
a) Red Hawk agrees to drill its horizontal wells in Section 2, Township 7 North, Range 60 West, 6th P.M. “in a North-South orientation and completed and stimulated within, but no closer than, 300 feet from Sections 35, Township 8 North, Range 60 West, 6th P.M., and the BLM, or its lessors, shall have the reciprocal right with respect to future wells to be drilled in Section 35, Township 8 North, Range 60 West, 6th P.M.”
b) As to the Niobrara Formation, no well shall be closer than 300 feet from: 1) the boundaries of the drilling and spacing unit composed of Section 1, Township 7 North, Range 60 West, 6th P.M., 2) the eastern and western section lines of Section 2, Township 7 North, Range 60 West, 6th P.M., and 3) the eastern and southern section lines of Section 11, Township 7 North, Range 60 West, 6th P.M.; and
c) With further exception allowing for corresponding reciprocal setbacks of 300 feet along the western section line of Section 11, Township 7 North, Range 60 West, 6th P.M. for the Niobrara Formation upon application and approval by the Commission of 300 foot boundary setbacks for the eastern section line of Section 10, Township 7 North, Range 60 West, 6th P.M. for the Niobrara Formation, without exception being granted by Director.
14. Land Testimony and exhibits submitted in support of the Application by Matt Skinner, Land Contractor for Red Hawk, showed Red Hawk has a partial undivided leasehold interest in the entirety of the Application Lands, and has a right to drill.
15. Geologic Testimony and exhibits submitted in support of the Application by Constance M. Walker, Senior Geologist with Petrotek Engineering Corporation (“Petrotek”) (retained by Red Hawk Petroleum) showed that the Niobrara exists under the Application Lands, and its average thickness in the area is between 225 and 250 feet.
16. Engineering Testimony and exhibits submitted in support of the Application by Kenneth J. Cooper, the Engineering Manager of Petrotek, showed that the drilling, completion, and production of up to eight (8) horizontal Niobrara wells in approximate 640-acre drilling and spacing units, will promote efficient drainage.
17. The above-referenced testimony and exhibits showed 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.
18. Red Hawk agreed to be bound by oral order of the Commission.
19. Based on the facts stated in the verified Application, having resolved all protests, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to modify Order Nos. 407-514 and 535-104 to allow 300 foot setbacks to the unit boundaries of an approximate 640-acre drilling and spacing unit established for Section 1, Township 7 North, Range 60 West, 6th P.M. and an approximate 1280-acre drilling and spacing unit established for Sections 2 and 11, Township 7 North, Range 60 West, 6th P.M.
ORDER
IT IS HEREBY ORDERED:
1. Order Nos. 407-514 and 535-104 are hereby modified to allow 300-foot setbacks to the unit boundaries of the below-described lands, without exception being granted by the Director:
Township 7 North, Range 60 West, 6th P.M.
Section 1: All
Section 2: All
Section 11: All
2. If Red Hawk agrees to drill its horizontal wells in Section 2, Township 7 North, Range 60 West, 6th P.M. “in a North-South orientation and completed and stimulated within, but no closer than, 300 feet from Sections 35, Township 8 North, Range 60 West, 6th P.M., so long as the BLM, or its lessors, has the reciprocal right with respect to future wells to be drilled in Section 35, Township 8 North, Range 60 West, 6th P.M.”;
3. As to the Niobrara Formation, no well shall be closer than 300 feet from: 1) the boundaries of the drilling and spacing unit established for Section 1, Township 7 North, Range 60 West, 6th P.M., 2) the eastern and western section lines of Section 2, Township 7 North, Range 60 West, 6th P.M., and 3) the eastern and southern section lines of Section 11, Township 7 North, Range 60 West, 6th P.M.; and
4. The unit boundary setbacks for the western section line of Section 11, Township 7 North, Range 60 West, 6th P.M. for the Niobrara Formation shall be 600 feet for the Niobrara Formation, without exception being granted by Director.
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 29th day of July, 2014, as of July 28, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary