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 CODELL AND NIOBRARA FORMATION, UNNAMED FIELD, ARAPAHOE COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 1412-SP-2220
ORDER NO. 535-614 |
REPORT OF THE COMMISSION
The Commission heard this matter on December 15, 2014 at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) vacate an approximate 640-acre exploratory drilling and spacing unit established by Order No. 535-118 for Section 32, Township 4 South, Range 64 West, 6th P.M.; 2) vacate two approximate 640-acre drilling and spacing units established by Order No. 535-145 for Sections 34 and 35, Township 4 South, Range 64 West, 6th P.M.; 3) vacate Order No. 535-237; 4) vacate two approximate 640-acre exploratory drilling and spacing units established by Order No. 535-313 for Sections 33, Township 4 South, Range 64 West, 6th P.M.; 5) vacate Order No. 535-393; and 6) establish an approximate 2560-acre unconventional resource unit for Sections 32, 33, 34 and 35, Township 4 South, Range 64 West, 6th P.M., and approve the appropriate number of 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”) 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 January 23, 2012, the Commission entered Order No. 535-118 which established one approximate 640-acre drilling and spacing exploratory unit for Section 32, Township 4 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
5. On March 5, 2012, the Commission entered Order No. 535-145 which established 14 approximate 640-acre drilling and spacing units for certain lands including Sections 34 and 35, Township 4 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
6. On January 7, 2013, the Commission entered Order No. 535-237 which approved up to two horizontal wells for the Niobrara Formation within an approximate 640-acre exploratory drilling and spacing unit for Section 32, Township 4 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
7. On May 6, 2013, the Commission entered Order No. 535-313 which established two approximate 640-acre drilling and spacing units including Section 33, Township 4 South, Range 64 West, 6th P.M., and approved up to two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
8. On July 29, 2013, the Commission entered Order No. 535-393 which pooled all interests within an approximate 640-acre drilling and spacing unit established by Order No. 535-313 for Section 33, Township 4 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation..
9. On October 16, 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 exploratory drilling and spacing unit established by Order No. 535-118 for Section 32, Township 4 South, Range 64 West, 6th P.M.; 2) vacate two approximate 640-acre drilling and spacing units established by Order No. 535-145 for Sections 34 and 35, Township 4 South, Range 64 West, 6th P.M.; 3) vacate Order No. 535-237; 4) vacate two approximate 640-acre exploratory drilling and spacing units established by Order No. 535-313 for Sections 33, Township 4 South, Range 64 West, 6th P.M.; 5) vacate Order No. 535-393; and 6) establish an approximate 2560-acre unconventional resource unit for the below-described lands (“Application Lands”), and approve the appropriate number of 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 920 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:
Township 4 South, Range 64 West, 6th P.M.
Section 32: All
Section 33: All
Section 34: All
Section 35: All
10. Applicant states that the proposed wells will be located on no more than 16 new wellpads in the unit, with no more than eight new wellpads in any one section within the unconventional resource unit.
11. On November 24, 2014 (supplemented on December 12, 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.
12. Land testimony and exhibits submitted in support of the Application by Julia Browning, Landman for ConocoPhillips, showed that ConocoPhillips holds 100% of the fee surface and 100% of fee minerals within the Application Lands and has a right to drill in the Application Lands.
13. Further testimony established that there are three existing horizontal wells within the proposed unit: the Tebo 32 3H Well (API No. 05-005-07178), the Grimm 34 4H Well (API No. 05-005-07179), and the Tebo 33 1H Well (API No. 05-005-07205). Production from the Tebo 32 3H Well is being allocated and will continue to be allocated on a lease basis. Production from the Grimm 34 4H Well is being allocated and will continue to be allocated in accordance with the Declaration of Pooling filed in Arapahoe County. Production from the Tebo 33 1H Well is being allocated and will continue to be allocated in accordance with the Declaration of Pooling filed in Arapahoe County.
14. Geologic testimony and exhibits submitted in support of the Application by Kristie Ramlal, Geologist for ConocoPhillips, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 320 feet thick, and is generally of uniform thickness throughout the Application Lands, with minimal local depositional variations in thickness which rarely exceed 10 to 15 feet.
15. Engineering testimony and exhibits submitted in support of the Application by Clint Hutchinson, Lead Reservoir Engineer for ConocoPhillips, showed that after the drilling of three horizontal wells within the proposed unit, the E-W oriented well performed significantly better than the two N-S oriented wells. Additional testimony showed that the average drainage area is estimated to be no greater than 407.3 acres for a horizontal well in the Niobrara Formation having a wellbore length of greater than 6,000 feet. Further testimony showed that an appropriate 2560-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.
16. 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.
17. ConocoPhillips agreed to be bound by oral order of the Commission.
18. The Commission requested that this matter be set for review by the Commission in one year and annually thereafter, without exception being granted by the Commission.
19. 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 exploratory drilling and spacing unit established by Order No. 535-118 for Section 32, Township 4 South, Range 64 West, 6th P.M.; 2) vacate two approximate 640-acre drilling and spacing units established by Order No. 535-145 for Sections 34 and 35, Township 4 South, Range 64 West, 6th P.M.; 3) vacate Order No. 535-237; 4) vacate two approximate 640-acre exploratory drilling and spacing units established by Order No. 535-313 for Sections 33, Township 4 South, Range 64 West, 6th P.M.; 5) vacate Order No. 535-393; and 6) establish an approximate 2560-acre unconventional resource unit for Sections 32, 33, 34 and 35, Township 4 South, Range 64 West, 6th P.M., and approve the appropriate number of 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 2560-acre unconventional resource unit for the below-described lands, is hereby established, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation and an appropriate number of horizontal wells within the unit, are hereby approved, in order to efficiently and economically recover the oil, gas and associated hydrocarbons from the proposed unit:
Township 4 South, Range 64 West, 6th P.M.
Section 32: All
Section 33: All
Section 34: All
Section 35: All
2. The productive interval of the wellbore will be located no closer than 460 feet from the unit boundaries, and no closer than 920 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director.
3. The proposed wells shall be located on no more than eight mutli-well pads within the unconventional resource unit, in addition to any existing pads in the unit.
4. This matter shall be set for review by the Commission in one year and annually thereafter, without exception being granted by the Commission.
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 8th day of January, 2015, as of December 15, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Jill Dorancy, Acting Secretary