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 NIOBRARA FORMATION, UNNAMED FIELD, WELD COUNTY, COLORADO
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CAUSE NO. 535
DOCKET NO. 151000561
ORDER NO. 535-705
TYPE: SPACING
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REPORT OF THE COMMISSION
The Commission heard this matter on October 26, 2015, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to vacate Order No. 535-6 as only as to Sections 18 (Lots 1-4) and 19, Township 12 North, Range 65 West, 6th P.M., establish an approximate 1,299.82-acre drilling and spacing unit for those portions of Sections 18 (Lots 1-4), 19, and 30, Township 12 North, Range 65 West, 6th P.M. lying within the State of Colorado, and approve up to seven 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. Anadarko E&P Onshore LLC, Operator No. 2800 (“Anadarko” 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 April 4, 2011, the Commission approved Order No. 535-6 which, among other things, established an approximate 666.86-acre drilling and spacing unit for Sections 18 (Lots 1-4) and 19, Township 12 North, Range 65 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, and approved two horizontal wells within the unit. There are no horizontal wells drilled or producing pursuant to this order in Sections 18 (Lots1-4) and 19, Township 12 North, Range 65 West, 6th P.M.
6. On August 21, 2015, Anadarko, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to vacate Order No. 535-6, establish an approximate 1,299.82-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to seven 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 no closer than 330 feet from the unit boundaries, and not less than 150 feet from the treated interval of any well within the Niobrara Formation, unless an exception is granted by the Director:
Township 12 North, Range 65 West, 6th P.M.
Section
18: Lots 1-4 (approximate 39.42 acres, more or less)
Section 19: All
Section 30: All
(all those portions lying within the State of Colorado)
7. On September 5, 2015, Anadarko, 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.
8. Land testimony and exhibits submitted in support of the Application by Jason Rayburn, Senior Landman for Anadarko, showed that Anadarko 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 Thomas Berkman, Senior Project Advisor for Anadarko, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 130 to 140 feet thick, and is generally of uniform thickness throughout the Application Lands.
10. Engineering testimony and exhibits submitted in support of the Application by Emily Boecking, Senior Reservoir Engineer for Anadarko, showed that the drainage area for analog horizontal Niobrara Formation wells are estimated at 115 acres, and an approximate 1299.82-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by seven horizontal wells 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. On October 22, 2015, Anadarko, by its attorneys, agreed that the drilling and spacing unit contains federal minerals. As such, Anadarko agrees to submit a Communitization Agreement (“CA”) to the Bureau of Land Management (“BLM”) for any existing wells within 60 days of the entry of this order. Anadarko also agrees to submit a CA to the BLM at least 90 days before the anticipated date of first production (as defined in the COGCC Rules) from the initial well drilled within the exploratory drilling unit (or drilling and spacing unit).
13. Anadarko 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 vacate Order No. 535-6 as only as to Sections 18 (Lots 1-4) and 19, Township 12 North, Range 65 West, 6th P.M., establish an approximate 1,299.82-acre drilling and spacing unit for those portions of Sections 18 (Lots 1-4), 19, and 30, Township 12 North, Range 65 West, 6th P.M. lying within the State of Colorado, and approve up to seven horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. Order No. 535-6 is hereby vacated only as to Sections 18 (Lots 1-4) and 19, Township 12 North, Range 65 West, 6th P.M.
2. An approximate 1,299.82-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to seven horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:
Township 12 North, Range 65 West, 6th P.M.
Section
18: Lots 1-4 (approximate 39.42 acres, more or less)
Section 19: All
Section 30: All
(all those portions lying within the State of Colorado)
3. The productive interval of the wellbore will be no closer than 330 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in such unit, unless an exception is granted by the Director.
4. The wells will be drilled from no more than four well pads within the unit, unless an exception is granted by the Director.
5. Anadarko will submit a Communitization Agreement (“CA”) to the BLM for any existing wells within 60 days of the entry of this order. Anadarko also agrees to submit a CA to the BLM at least 90 days before the anticipated date of first production (as defined in the COGCC Rules) from the initial well drilled within the exploratory drilling unit (or 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 _____ day of November, 2015, as of October 26, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Julie Murphy, Secretary