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, ARAPAHOE COUNTY, COLORADO

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CAUSE NO. 535

 

DOCKET NO. 150400227

 

ORDER NO. 535-664

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on May 18, 2015, at the Aims Community College, 260 College Avenue, Fort Lupton, Colorado, upon application for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-97 for Section 26, Township 4 South, Range 65 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate Order No. 535-100 as it applies to Section 25, Township 4 South, Range 65 West, 6th P.M.; 3) establish an approximate 1280-acre drilling and spacing unit for Sections 25 and 26, Township 4 South, Range 65 West, 6th P.M.; and 4) 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.  Section 27, Township 4 South, Range 64 West, 6th P.M. is subject to Rule 318.a. for the Niobrara Formation.

5.         On November 29, 2011, the Commission entered Order No. 535-97 which established twenty-five approximate 640-acre drilling and spacing units for certain lands, including Section 26, Township 4 South, Range 65 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.

6.         On December 16, 2011, the Commission entered Order No. 535-100 which, among other things, established that: 1) surface locations for each horizontal well may be located anywhere within Section 25, Township 4 South, Range 65 West, 6th P.M. or on adjoining lands with appropriate surface owner approval;  2) the lateral of a given horizontal well may enter the Niobrara Formation no closer than 300 feet from the section line; 3) the treated interval within the Niobrara Formation may be located not closer than 460 feet from the section line; and 4) the distance between the treated interval of Niobrara wells within the Application Lands shall not be less than 920 feet, for the production of oil, gas, and other hydrocarbons from the Niobrara Formation.

7.         On February 12, 2015, ConocoPhillips, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-97 for Section 26, Township 4 South, Range 65 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) extend Order No. 535-100 as it applies to Section 26, Township 4 South, Range 65 West, 6th P.M.; 3) establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”) 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 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 25:      All

Section 26:      All

 

Applicant requests that the proposed wells will be located on no more than eight wellpads within the drilling and spacing unit.

 

8.         On March 23, 2015, 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.

 

9.         Land testimony and exhibits submitted in support of the Application by Jace McKenzie, Associate Landman for ConocoPhillips, showed that both the surface and the mineral interest in the Application Lands is owned entirely in fee, and that ConocoPhillips owns a partial undivided leasehold ownership interest in the Application Lands.

 

10.       Geoscience testimony and exhibits submitted in support of the Application by Kristie Ramlal, Geologist for ConocoPhillips, showed the Niobrara Formation is present throughout the Application Lands, is approximately 320 feet thick, and is generally of uniform thickness throughout the Application Lands.

 

11.       Engineering testimony and exhibits submitted in support of the Application by Stephanie LaCour, Senior Reservoir Engineer for ConocoPhillips, demonstrated that the drainage area of a horizontal well in the Niobrara formation of the Application Lands having a wellbore lateral of greater than 6,000 feet in length is estimated to be no greater than 407.3 acres, that a horizontal well with a greater than 6,000 foot lateral producing from the Niobrara formation meets ConocoPhillips’ economic requirements for exploration wells, that the proposed 1280 acre drilling and spacing unit, with the requested setbacks, for a horizontal well in the Niobrara formation in the Application Lands, and authorization for an optional second such well in each unit, will promote efficient drainage, protect correlative rights, and prevent waste. She also demonstrated 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.

 

12.       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.

 

13.       ConocoPhillips 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 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. 535-97 for Section 26, Township 4 South, Range 65 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate Order No. 535-100 as it applies to Section 25, Township 4 South, Range 65 West, 6th P.M.; 3) establish an approximate 1280-acre drilling and spacing unit for Sections 25 and 26, Township 4 South, Range 65 West, 6th P.M.; and 4) 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. 535-97 for Section 26, Township 4 South, Range 65 West, 6th P.M., is hereby vacated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

2.         Order No. 535-100, is hereby vacated, as it applies to Section 25, Township 4 South, Range 65 West, 6th P.M.

 

3.         An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and 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 4 South, Range 65 West, 6th P.M.

Section 25:      All

Section 26:      All

 

4.         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.

 

5.         The proposed wells shall be located on no more than eight wellpads within the drilling and spacing 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 1st day of June, 2015, as of May 18, 2015.

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By__________________________________

Julie Murphy, Secretary