BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

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-2112

 

ORDER NO. 535-533

 

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 two approximate 640-acre drilling and spacing units established by Order No. 535-89 for Sections 20 and 21, Township 3 South, Range 65 West, 6th P.M.; and 2) establish an approximate 1280-acre exploratory drilling and spacing unit for Sections 20 and 21, Township 3 South, Range 65 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.         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. Sections 20 and 21, Township 3 South, Range 65 West, 6th P.M. are subject to this Order for the Niobrara Formation.

 

5.         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 o: 1) vacate two approximate 640-acre drilling and spacing units established by Order No. 535-89 for Sections 20 and 21, Township 3 South, Range 65 West, P.M.; and 2) establish an approximate 1280-acre exploratory drilling and spacing unit for Sections 20 and 21, Township 3 South, Range 65 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, 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 65 West, 6th P.M.
Section 20:      All
Section 21:      All

 

Applicant also requested that all proposed wells be located on no more than two well pads within the unit.

 

6.         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.

 

            7.         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.  

 

8.         Geologic testimony and exhibits submitted in support of the Application by Christian Marine Lahsberg, Staff Geologist for ConocoPhillips, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 324 feet thick, and is generally of uniform thickness throughout the Application Lands.

 

9.         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.

 

10.       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.

 

11.       ConocoPhillips agreed to be bound by oral order of the Commission.

 

12.       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 two approximate 640-acre drilling and spacing units established by Order No. 535-89 for Sections 20 and 21, Township 3 South, Range 65 West, P.M.; and 2) establish an approximate 1280-acre exploratory drilling and spacing unit for Sections 20 and 21, Township 3 South, Range 65 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.         Two approximate 640-acre drilling and spacing units established by Order No. 535-89 for Sections 20 and 21, Township 3 South, Range 65 West, 6th P.M., are 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.

 

3.         The productive interval of the wellbores 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:

 

Township 3 South, Range 65 West, 6th P.M.
Section 20:      All
Section 21:      All

 

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