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, ADAMS COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 1409-SP-2111
ORDER NO. 535-532 |
REPORT OF THE COMMISSION
The Commission heard this matter on September 15, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, CO, upon application for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-89 for Section 26, Township 3 South, Range 64 West, 6th P.M.; and 2) establish an approximate 1280-acre exploratory drilling and spacing unit for Sections 25 and 26, Township 3 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. Sections 25 and 26, Township 3 South, Range 64 West, 6th P.M. are subject to Rule 318.a. for the Niobrara Formation.
5. On October 31, 2011, the Commission entered Order No. 535-89 which established 18 approximate 640-acre drilling and spacing units and approved two horizontal wells in each unit, for production of oil, gas, and other hydrocarbons from the Niobrara Formation. Section 26, Township 3 South, Range 64 West, 6th P.M. is subject to this Order for the Niobrara Formation.
6. On July 17, 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. 535-89 for Section 26, Township 3 South, Range 64 West, 6th P.M.; and 2) establish an approximate 1280-acre exploratory drilling and spacing unit for the below-described lands (“Application Lands”) and to 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
3 South, Range 64 West, 6th P.M.
Section 25: All
Section 26: All
Applicant also requested that all proposed wells be located on no more than two well pads within the unit.
7. On September 2, 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 Kelsey L. Swinford, Staff Landman, Rockies Business Unit, Niobrara Land for ConocoPhillips, showed that ConocoPhillips holds oil and gas leasehold interests and has a right to drill in the Application Lands.
9. Geologic testimony and exhibits submitted in support of the Application by Abby Tomkiewicz, Senior Geologist for ConocoPhillips, showed that the Niobrara Formation is is present throughout the Application Lands, is approximately 310 feet thick, and is generally of uniform thickness throughout 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 having a length of more than 6,000 feet is estimated at 407.3 acres, and a 1280-acre exploratory 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. Further testimony showed that the drilling of a long lateral will recover resource within the 920 foot area between the two sections which would otherwise not be recovered with 640-acre spacing and 460-foot setbacks.
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. 535-89 for Section 26, Township 3 South, Range 64 West, 6th P.M.; and 2) establish an approximate 1280-acre exploratory drilling and spacing unit for Sections 25 and 26, Township 3 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. 535-89 for Section 26, Township 3 South, Range 64 West, 6th P.M., is hereby vacated.
2. An approximate 1280-acre exploratory 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.
Township
3 South, Range 64 West, 6th P.M.
Section 25: All
Section 26: All
3. The productive interval of the wellbore shall 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.
4. The proposed wells shall be located on no more than two well pads within the 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 22nd day of September, 2014, as of September 15, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary