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 IN AN UNNAMED FIELD, ELBERT & DOUGLAS COUNTIES, COLORADO |
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CAUSE NO. 535
ORDER NO. 535-54
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REPORT OF COMMISSION
This cause came on for hearing before the Commission on August 8, 2011, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to establish twenty four (24) approximate 640-acre drilling and spacing units for certain lands located in Townships 6 and 7 South, Ranges 63 through 65 West, 6th P.M., and approve one horizontal well within each unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1. Chesapeake Exploration, LLC (“Chesapeake” 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 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. The below-listed lands are subject to this Rule for the Niobrara Formation:
Township 6 South, Range 63 West, 6th P.M.
Section 31: All
Township 7 South, Range 63 West, 6th P.M.
Section 6: All
Township 6 South, Range 64 West, 6th P.M.
Section 2, 11, 12, 34, 35, and 36: All
Township 7 South, Range 64 West, 6th P.M.
Section 1, 2, 3, 5, 7, 9, 12, 15 through 19, 29, and 34: All
Township 6 South, Range 65 West, 6th P.M.
Section 26 and 36: All
Township 7 South, Range 66 West, 6th P.M.
Section 8: All
5. On June 9, 2011, Chesapeake, by its attorneys, filed with the Commission a verified application (the “Application”) for an order to establish 25 approximate 640-acre drilling and spacing units for the below-listed lands, and approve one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore for the permitted well to be no closer than 600 feet from the unit boundaries, without exception being granted by the Director:
Township 6 South, Range 63 West, 6th P.M.
Section 31: All
Township 7 South, Range 63 West, 6th P.M.
Section 6: All
Township 6 South, Range 64 West, 6th P.M.
Section 2, 11, 12, 34, 35, and 36: All
Township 7 South, Range 64 West, 6th P.M.
Section 1, 2, 3, 5, 7, 9, 12, 15 through 19, 29, and 34: All
Township 6 South, Range 65 West, 6th P.M.
Section 26 and 36: All
Township 7 South, Range 66 West, 6th P.M.
Section 8: All
7. On July 26, 2011, Chesapeake, by its attorneys, submitted a written letter withdrawing Section 8, Township 7 South, Range 66 West, 6th P.M. from the amended Application, resulting in the following lands remaining subject to the Application (the “Application Lands”):
Township 6 South, Range 63 West, 6th P.M.
Section 31: All
Township 7 South, Range 63 West, 6th P.M.
Section 6: All
Township 6 South, Range 64 West, 6th P.M.
Section 2, 11, 12, 34, 35, and 36: All
Township 7 South, Range 64 West, 6th P.M.
Section 1, 2, 3, 5, 7, 9, 12, 15 through 19, 29, and 34: All
Township 6 South, Range 65 West, 6th P.M.
Section 26 and 36: All
8. On July 27, 2011, Chesapeake, by its attorneys, filed with the Commission a written request to approve the amended Application based on the merits of the amended verified Application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the amended Application.
9. Land testimony and exhibits submitted in support of the Application by Nick Watkins, District Landman for Chesapeake, showed that Chesapeake is a leaseholder of the Application Lands.
10. Geology testimony and exhibits submitted in support of the Application by Cameron Thompson, Geologist for Chesapeake, showed that the Niobrara Formation underlies the entirety of the Application Lands. The total thickness of the Niobrara Formation under the proposed spacing areas is approximately 360 feet to 495 feet with a regional dip of approximately 50 feet per mile to the west.
11. Engineering testimony and exhibits submitted in support of the Application by Matthew Nikkel, Reservoir Engineer for Chesapeake, showed an estimated ultimate recovery of 100,000 barrels of oil, 300,000 MCF of gas, and a calculated oil drainage area for the Niobrara Formation within the Application Lands at 75 acres per horizontal well, and a calculated gas drainage area for the Niobrara Formation within the Application Lands at 44 acres per horizontal well.
12. The above-referenced testimony and exhibits show that granting the amended Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
13. Chesapeake agreed to be bound by oral order of the Commission.
14. Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Officer review of the amended Application under Rule 511., the Commission should enter an order establishing twenty four (24) approximate 640-acre drilling and spacing units for certain lands located in Townships 6 and 7 South, Ranges 63 through 65 West, 6th P.M., and approve one horizontal well within each unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that 24 approximate 640-acre drilling and spacing units are hereby established for the below-listed lands, and one horizontal well is approved within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore for any permitted well to be no closer than 600 feet from the unit boundaries, without exception being granted by the Director:
Township 6 South, Range 63 West, 6th P.M.
Section 31: All
Township 7 South, Range 63 West, 6th P.M.
Section 6: All
Township 6 South, Range 64 West, 6th P.M.
Section 2, 11, 12, 34, 35, and 36: All
Township 7 South, Range 64 West, 6th P.M.
Section 1, 2, 3, 5, 7, 9, 12, 15 through 19, 29, and 34: All
Township 6 South, Range 65 West, 6th P.M.
Section 26 and 36: All
IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.
IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 30 days after the date this Order is mailed by the Commission.
IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.
ENTERED this 12th day of August, 2011, as of August 8, 2011.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert A. Willis, Acting Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
August 12, 2011