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, WELD COUNTY, COLORADO

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CAUSE NO. 535 DOCKET NO. 151000628 ORDER NO. 535-711 TYPE: EXCEPTION LOCATION

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 reduce setbacks in an approximate 1,343-acre drilling and spacing unit established by Order No. 535-663 for Sections 17, 20 and 29, Township 12 North, Range 65 West, 6th P.M. to not less than 330 feet from the unit boundaries and not less than 150 feet from the treated interval of another well producing from the same formation unless an exception is granted by the Director 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.     On April 4, 2011, the Commission entered Order No. 535-6 which, among other things, established an approximate 702.86-acre drilling and spacing unit for Lots 1-4 of Section 17 (being all that portion lying within the state of Colorado) and all of Section 20, Township 12 North, Range 65 West, 6th P.M., and approved two horizontal wells for the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation with the productive intervals of the wellbore of any permitted well to be located not less than 600 feet from the unit boundaries, and not less than 600 feet from the productive interval of any well being drilled or producing from the Niobrara Formation, without exception being granted by the Director.

            5.         On October 27, 2014, the Commission approved Order No. 535-663, which (a) vacated the approximate 702.86-acre drilling and spacing unit established by Order No. 535-6 for Sections 17 and 20, Township 12 North, Range 65 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; (b) established an approximate 1,343.00-acre drilling and spacing unit for the Application Lands; (c) approved up to seven (7) horizontal wells within the unit, for production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the productive intervals of the wellbore of any permitted well to be located not less than 600 feet from the unit boundaries, and not less than 600 feet from the productive interval of any well being drilled or producing from the Niobrara Formation, without exception being granted by the Director; and (d) allowed no more than four surface locations for the development of the Niobrara Formation within the spacing unit.

6.           On August 27, 2015, Anadarko, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order an order to reduce setbacks in an approximate 1,343-acre drilling and spacing unit established by Order No. 535-663 for the below-described lands (“Application Lands”) to not less than 330 feet from the unit boundaries and not less than 150 feet from the treated interval of another well producing from the same formation, unless an exception is granted by the Director:

Township 12 North, Range 65 West, 6th P.M.

                                    Section 17:      Lots 1-4 (all that portion lying within the state of Colorado)

                                    Section 20:      All

                                    Section 29:      All   

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 1,343.00-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.  Further testimony showed a calculated drainage radius of 256 feet supporting a setback of 330 feet from unit boundaries in order to access reserves and prevent waste.

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 reduce setbacks in an approximate 1,343-acre drilling and spacing unit established by Order No. 535-663 for Sections 17, 20 and 29, Township 12 North, Range 65 West, 6th P.M. to not less than 330 feet from the unit boundaries and not less than 150 feet from the treated interval of another well producing from the same formation unless an exception is granted by the Director for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

ORDER

IT IS HEREBY ORDERED:

1.         Setbacks within the unit established by Order No. 535-663 for the below-described lands are hereby reduced to not less than 330 feet from the unit boundaries and not less than 150 feet from the treated interval of another well producing from the same formation, unless an exception is granted by the Director:

Township 12 North, Range 65 West, 6th P.M.

                                    Section 17:      Lots 1-4 (all that portion lying within the state of Colorado)

                                    Section 20:      All

                                    Section 29:      All   

2.         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