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. 150900549

 

ORDER NO. 535-702

 

TYPE: SPACING

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on September 14, 2015, at the Western State Colorado University, University Center, South Ballroom, 600 North Adams Street, Gunnison, Colorado, upon application for an order to establish an approximate 640-acre drilling and spacing unit for Section 36, 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”) 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. 

 

5.           On July 16, 2015, ConocoPhillips, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 640-acre 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 150 feet from the productive interval of any other wellbore located in the unit, without exception granted by the Director:

 

Township 3 South, Range 65 West, 6th P.M.

Section 36:  All

 

6.         On August 21, 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.

 

7.         On September 2, 2015, ConocoPhillips, by its attorneys, and the Bureau of Land Management (BLM) agreed that the Application Lands contain federal minerals.  As such, ConocoPhillips agreed to submit a Communitization Agreement to the BLM for any existing wells within 60 days of the entry of an order.  ConocoPhillips also agreed to submit a Communitization Agreement to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission’s Rules) from the initial well drilled within the drilling and spacing unit for the Application Lands.

 

            8.         Land testimony and exhibits submitted in support of the Application by Lance Young, Associate Landman 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 Christian Marine Lahsberg, Staff Geologist for ConocoPhillips, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 319 feet thick, and is generally of uniform thickness throughout the Application Lands.

 

10.       Engineering testimony and exhibits submitted in support of the Application by Stephanie LaCour, Reservoir Engineer for ConocoPhillips, showed that the drainage area for analog horizontal Niobrara Formation wells are estimated at 301.2 acres, and an approximate 640-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.

 

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 establish an approximate 640-acre drilling and spacing unit for Section 36, 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.         An approximate 640-acre 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 65 West, 6th P.M.

Section 36:  All

 

2.         The productive interval of the wellbore will be located no closer than 460 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless an exception is granted by the Director.

 

3.         ConocoPhillips shall submit a Communitization Agreement to the BLM for any existing wells within 60 days of the entry of this Order.  ConocoPhillips shall submit a Communitization Agreement to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission’s Rules) from the initial well drilled within the drilling and spacing unit for the above described lands.

 

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 21st day of September, 2015, as of September 14, 2015.  

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By__________________________________

Julie Murphy, Secretary